Portugal - Country Profile

Portugal - Country Profile aicep Portugal Global Portugal - Country Profile (May 2009) Index 1. History 4 2. Culture 5 3. Geography and soci...
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Portugal - Country Profile

aicep Portugal Global Portugal - Country Profile (May 2009)

Index

1. History

4

2. Culture

5

3. Geography and socio-economic characteristics

7

3.1 Geography, climate

7

3.2 Socio-economic indicators

7

4. Political and Administrative Organization

9

4.1 Political structure

9

4.2 Administrative organization

10

5. Population

11

5.1 Regional breakdown

12

5.2 Migrations

13

5.3 Active population

14

5.4 Schooling levels of the active population

14

6. Infrastructures

15

6.1 Roadway network

15

6.2 Railway network

16

6.3 Ports

17

6.4 Airports

17

6.5 Technological infrastructures

18

6.6 Policies for the future

20

7. Resources and productive structure

22

7.1 Agriculture, forestry and fishing

23

7.2 Industry

26

7.3 Construction

33

7.4 Services

33 2

aicep Portugal Global Portugal - Country Profile (May 2009)

8. Economy

37

8.1 Recent economic policy

37

8.2 The economic outlook

38

8.3 The regional economies

41

9. Regional economic framework – Portugal and the European Union

49

10. Foreign trade

50

10.1 Trade balance trends

50

10.2 Main trading partners

52

10.3 Composition of trade

54

10.4 International trade and the regions

55

11. Investment

56

11.1 Foreign direct investment trends in Portugal

57

11.1.1 Main investors by country

57

11.1.2 Foreign direct investment by major sectors

57

11.1.3 Recent foreign direct investment projects in Portugal

58

11.2 Trends in Portuguese foreign direct investment

60

11.2.1 Portuguese foreign direct investment by major recipients

60

11.2.2 Main sectors

60

11.2.3 Recent projects indicating the internationalization of Portuguese companies

61

12. Tourism

65

13. International and regional relations

67

14. Legal requirements for market access

68

14.1 Intra-EU exchange procedures

68

14.2 General import procedures

69

14.3 Foreign investment procedures

70

ANNEXES Annex 1 – Custom procedures

72

Annex 2 – Import procedures

73

Annex 3 – Useful Internet addresses

74 3

aicep Portugal Global Portugal - Country Profile (May 2009)

©Rui Morais de Sousa

1. History The battle of São Mamede which occurred in 1128, between the royalty of Portucale led by Dom Afonso Henriques and the Gallician nobles led by his mother Dona Teresa, was decisive for the birth of Portugal. Once the battle was won and Dona Teresa was expelled from the Condado Portucalense, Dom Afonso Henriques declared the principality independent. Various skirmishes continued against León and Castile and against the Muslims, but it was not until the Battle of Ourique, in 1139, that Portugal’s independence was declared and Dom Afonso Henriques, with the help of Portuguese chiefs, was proclaimed sovereign - Dom Afonso I of Portugal. However, the independence of Portugal would only be recognized by the King of Castile in

Padrão dos Descobrimentos (Monument to the Discoveries)

1143 with the signing of the Treaty of Zamora. The dream of a new Brazil (this time in Africa, linking Angola There followed a long period of conquests and a number of treaties were signed between Portugal and the Kingdom of Castile and, in 1297, during the reign of Dom Dinis, the actual frontiers of Portugal were defined (the oldest in Europe).

and Mozambique through regularly travelled territories that were never settled) was hindered by English imperial ambitions, stirring up forces for a change in political regime. Thus, at the beginning of the twentieth century the First Republic was established in Portugal (1910).

The fourteenth century saw the appearance of the first bright lights of the Golden Age of Portugal. Its language

Due to the financial crisis that swept Europe after World War

began to develop apart from the Gallic-Portuguese, the

I and to domestic political instability, in 1926 a military coup

Court became distinguished with intellectual brilliance on a

put an end to the parliamentary regime of the First Republic.

European scale and the University was founded.

In 1933, the regime in power gave way to the Estado Novo, or New State, which ruled the country until 1974.

The fifteenth century marked the beginning of the Discoveries, during which Portugal witnesses a period

On 25 April 1974 the Armed Forces Movement cast out

of great expansion across the oceans. The archipelagos

the existing political regime that ruled Portugal, replacing it

of Madeira (1419) and the Azores (1425) were officially

with a democratic regime. With democracy came economic

discovered and a few cities in the Kingdom of Morocco

and social development, flourishing cultural and scientific

were conquered. Among the numerous personalities

activity and the affirmation of innovation in Portugal.

involved with this period the following stand out: Diogo Cão, for the discovery of the African coast, Bartolomeu

With the end of the imperial era (with the liberation, in

Dias, who in 1488 sailed around the Cape of Good Hope

the mid 1970s, of Angola, Cape Verde, Guinea Bissau,

and opened the route to the discovery of India by Vasco

Mozambique, and São Tomé and Príncipe), Portugal became

da Gama (1498) and, lastly, Pedro Álvares Cabral who

a member of the European Economic Community in 1986

discovered Brazil in 1500.

and later joined the Euro Area, but without severing the 4

aicep Portugal Global Portugal - Country Profile (May 2009) strong links existing with the other seven Portuguese-

Clérigos Tower, in granite, in Oporto, and the Romanesque

speaking countries (which led to the creation of the

Cathedral of Braga.

Community of Portuguese Speaking Countries, or CPLP, Comunidade dos Países de Língua Portuguesa) and with the

In many monuments one can observe in stone

Portuguese communities scattered throughout the world.

our relationship with the sea. Such can be seen in contemporary Portuguese architecture where names like

Currently, Portugal is a country that enjoys social and

Álvaro Siza Vieira or Eduardo Souto de Moura stand out,

political stability that asserts itself more and more due to

particularly in the Park of Nations, the site of the last

its ability to engage in dialogue and to understand diversity

world’s fair of the twentieth century which was dedicated

based on its culture and style of life resulting from centuries

to the theme of the oceans. ©Rui Morais de Sousa

of living side by side with other peoples.

2. Culture Portuguese culture is based on a past marked by the peoples that occupied its territory, of which several outstanding examples remain: the temple of Diana in Évora from the Roman period and the Moorish architecture so typical of cities in the South of Portugal, such as Olhão and Tavira.

Portuguese art was enriched by various foreign influences during the centuries. The Portuguese discoveries around the world led to the country becoming more receptive to

Pavilhão de Portugal (Pavilion of Portugal) – Parque das Nações (Park of Nations)

oriental influences, as well as the period of the fifteenth century when the discovery of Brazil and its riches

The splendour of sculpture was expressed in the

influenced the development of the Baroque style.

magnificent twelfth and thirteenth century tombs and in the Baroque sculptures of the eighteenth century, the

In architecture, Roman and Gothic influences gave the

crèches of Joaquim Machado de Castro truly stand out. The

country some of its most imposing cathedrals. In the

classic and romantic traditions of Italy and France, besides

fifteenth century a completely national style was born – the

influencing the works of Machado de Castro, were also

Manueline style – that expressed the blending together of

determining factors in the plastic arts expression of António

various art forms into a luxurious and ornamental style.

Soares dos Reis, in the nineteenth century.

Various examples of great architectural works can be cited:

The school of painters of the fifteenth century was the

the Jeronimos Monastery in Lisbon; the Sé (cathedral)

precursor of a patrician style of painting of Flemish

of Lisbon, where traces of Roman construction are still

painters, who left an eminent heritage in religious art by

visible on the facade; the Palace of Justice in Lisbon, an

decorating various palaces and convents in Portugal. The

example of austere modern architecture; the Castle and

romantic period of the nineteenth century, although late,

Church of the Convent of Christ in Tomar; the Portuguese

led to the rebirth of national art. There followed a period of

Abbey of Santa Maria da Vitória (in the Gothic style); the

natural realism that opened doors to new experiences that 5

aicep Portugal Global Portugal - Country Profile (May 2009) followed in the twentieth century; worth noting are the

In the theatre, the outstanding figures are Gil Vicente, António

works of Maria Helena Vieira da Silva in abstract painting

José da Silva (known as “the Jew”) and Bernardo Santareno.

and of Carlos Botelho in Lisbon street scenes. Popular music and dance and the traditional fado continue The ceramic tile sector is equally very rich. Many sixteenth

to be fundamental forms of musical expression of the

and seventeenth century buildings are covered in tiles.

country. The most famous fadista in the world was Amália

They were also chosen to decorate the walls of rooms

Rodrigues, but today names like Carlos do Carmo or Marisa

and entrance halls of various palaces and stately mansions

keep alive this type of song long associated with Portugal.

where there are panels of tiles, with blue and white ©António Sacchetti

colours predominating.

Exceptionally good examples can be seen in the Pátio of Carranca, in the Paço of Sintra, in the Church of São Roque in Lisbon and in the Quinta da Bacalhoa, in Vila Fresca de Azeitão, near Setúbal. Even the Lisbon subway/ underground authority decorated some of its stations with tiles signed by contemporary Portuguese artists.

Literature stands out through the richness and variety of its lyric poetry, through writings exalting history and for subtlety in drama, biographies and essays. The first songbooks, known as “cancioneiros” are witness to

Centro Cultural de Belém (Lisbon)

a school of poetry based on love, a style that crossed the border and influenced Spanish “cancioneiros”. The romantic style absorbed the influence of our neighbours, although without preference for the heroic.

Lastly, speaking of Portuguese culture is tantamount to the ability to spread the language. Portuguese is the fifth most spoken language in the world and the third most spoken in the West; more than 210 million people speak the language.

The Lusíadas of Luís de Camões is the great epic work of the sixteenth century; it is the classic poem that exalts the exploits of the Portuguese beyond the sea.

It is the official language of Angola, Brazil, Cape Verde, Guinea-Bissau, Mozambique, and São Tomé and Príncipe. It is also one of the official languages of Equatorial Guinea

There exist other well known names in poetry as, for example, Fernando Pessoa, Eugénio de Andrade, Florbela Espanca, Cesário Verde, António Ramos Rosa, Mário Cesariny and Antero do Quental, among others.

(together with Spanish and French), East Timor (with Tétum) and Macao (with Cantonese). It is even spoken in former Portuguese India (Goa, Damão and Diu), Andorra, Luxembourg and Namíbia, in addition to having official status in the European Union, Mercosul and the African Union.

As for prose, there are Damião de Góis, Father António Vieira, Almeida Garrett, Eça de Queiroz, Camilo Castelo Branco, Miguel Torga, Fernando Namora, José Cardoso Pires, António Lobo Antunes and José Saramago (winner of the Nobel Prize for literature in 1998). 6

aicep Portugal Global Portugal - Country Profile (May 2009)

3. Geography and Socio-Economic Characteristics 3.1 Geography, climate Portugal is geographically situated on the west coast of Europe, in the Iberian Peninsula. It borders Spain on the north and east, and the Atlantic Ocean on the west and south. Its frontiers were defined as long ago as the thirteenth century and include, in addition to the continental territory, the Autonomous Regions of the Azores and Madeira, archipelagos situated in the Atlantic Ocean.

generally of lower altitude, are distinct from the highlands of the interior. The highest altitudes are located in a mountain chain situated in the centre of the country: the Serra da Estrela, at 1,991 meters in altitude, is the highest point. In the archipelagos, the mountain of Pico (2,351 meters) is the highest point in the Azores and the Pico Ruivo (1,862 meters) is the top elevation in Madeira.

On the generally not so indented continental coastline, the main deltas are estuaries (Tagus and Sado). Then there are small bays (Peniche, Sines, Lagos) and lagoon-type formations (Vouga-Aveiro, Óbidos, Faro). The capes of the coastline are few in number and small in size, but of great

With a total area of 92,090 km2, Portugal benefits from an

beauty: these are the capes of Mondego, Carvoeiro, Roca,

excellent geographical location, being situated in a geo-

Espichel, Sines, São Vicente, and Santa Maria.

strategical position between Europe, America and Africa. The climate is characterized by mild winters and balmy summers. The rainiest months are November and December, while the period with the least precipitation occurs between April and September.

3.2 Socio-economic indicators In the last ten years a series of extensive reforms were adopted which had a significant impact on the level of economic development and social cohesion (protection and social inclusion) in Portugal.

The fight against extreme poverty, minimum pensions, the Social Inclusion Income Law, and the Solidarity Supplement for the Elderly Regulation, were paradigm measures in social protection. As for measures relating to social inclusion, the highlight is the assistance to families through care centres, investment in equipment, including a network of continuing care for the elderly and dependent persons, and local intervention to combat poverty and exclusion, taking into account local requirements and the On the continental territory, the Tagus (the longest river)

people most in need of assistance.

divides the more mountainous north from the south with its plains and lower elevations. Even the coastal areas, 7

aicep Portugal Global Portugal - Country Profile (May 2009)

Socio-economic indicators Demography

2003

2004

2005

2006

2007

Thousands

10,445

10,529

10,563

10,586

10,604

Per Thousand

10.8

10.4

10.4

10.0

9.7

2001-2003

2002-2004

2003-2005

2004-2006

2005-2007

77.0

77.4

77.7

78.2

78.5

2003

2004

2005

2006

2007

Thousands

248

254

260

262

264

Elementary and secondary a

Thousands

1,560

1,548

1,530

1,492

1,512

Higher education a

Thousands

401

395

381

367

378

Public spending on education b

% of GDP

5.4

5.9

7.6

7.1

4.4

2003

2004

2005

2006

2007

Millions

8.9

9.0

9.7

10.3

10.0

Art gallery exhibitions



5,880

6,130

6,449

6,463

6,609

Publications c



1,929

1,929

2,052

2,054

1,994

106 EUR

776.9

648.2

913.8

802.9

802.8

2003

2004

2005

2006

2007

Total population (resident) Birth rate

Life expectancy at birth

Years

Education Preschool

a

Culture Museum visitors

Local government spending on cultural activities Health Doctors



34,440

35,213

36,138

36,924

37,904

Hospitals



204

209

204

200

198

Hospital beds



38,117

38,239

37,330

36,563

36,178

Health centres



393

376

379

378

377



2,986

3,012

3,034

3,037

3,038

% of GDP

6.7

6.8

6.9

6.8

6.6

2003

2004

2005

2006

2007

Thousands

904

1,224

1,436

1,580

1,612

Access to Internet service

Rate of Penetration

8.6

11.6

13.6

14.9

15.2

Main telephone lines

Rate of Penetration/ 100 Inhab.

40.9

40.3

40.1

39.9

39.5

Mobil telephone service subscribers

Subscribers (thousands)

10,003

10,571

11,447

12,226

13,451

Penetration rate – land line service

Subscribers/ 100 Inhab.

95,0

100,0

108,0

115,0

127,0

Cable television subscribers

Thousands

1,335

1,343

1,400

1,421

1,490

Subscribers/ % Population

13.0

13.0

13.0

13.0

14.0

Receipts/ % of GDP

5.7

5.7

5.3

5.1

Pharmacies and mobile pharmacy points Current public spending on health

b

Information Society Internet subscribers

Penetration rate of cable network Share of the communications sector

5.6

Sources: INE - Instituto Nacional de Estatística; Autoridade Nacional de Comunicações Notes: (a) Ministério da Educação (GEPE) and Ministério da Ciência, Tecnologia e Ensino Superior (b) Calculations based on data from the Ministério das Finanças (c) Daily, weekly, monthly, and annual frequency

8

aicep Portugal Global Portugal - Country Profile (May 2009)

4. Political and Administrative Organization 4.1 Political structure As concerns the political structure, the Portuguese

are to approve constitutional changes, approve the politicaladministrative statutes of the Autonomous Regions, approve the State Budget, make proposals to the President of the Republic concerning whether to hold referenda, evaluate the programs of the Government, deal with tax matters and evaluate activities of the Government and the Administration.

Republic is a nation founded on democratic law, based on popular suffrage, pluralism of expression and democratic political organization, respect and the guarantee of fundamental rights and liberties, and on the separation and independence of powers.

The Assembly of the Republic can be dissolved by the President of the Republic following a hearing with the parties represented in the Assembly as well as the Council of State. The current President of the Assembly of the Republic is Jaime Gama and the distribution of

The sovereign bodies are the President of the Republic, the Assembly of the Republic, the Government, and the Courts.

the party seats is as follows: Socialist Party (PS) – 121 deputies; Social-Democratic Party (PPD/PSD) – 75 deputies; Portuguese Communist Party, Ecologist Party and the

In the Portuguese constitutional system, the President of

Greens (PCP/PEV) – 14 deputies; Popular Party (CDS/PP) –

the Republic is elected by direct and universal suffrage

12 deputies; and the Left Bloc (BE) – 8 deputies.

in a secret ballot, and his mandate is five years. (Reelection for a third consecutive term is not permitted.) The

The Government is the principal body in the Public

President of the Republic is the supreme representative

Administration and is responsible for setting general policy

of the Portuguese Republic, he guarantees national

for the country. It is composed of the Prime Minister, the

independence, the unity of the State and the normal

Cabinet and the Secretaries and Under-Secretaries of State.

functioning of the democratic institutions, and is, in effect,

The Prime Minister, who presides over the Council of

the Supreme Commander of the Armed forces.

Ministers (Cabinet) meetings, is nominated by the President of the Republic. The other members of the Government

Among his sovereign powers, the most important are the

are nominated by the President of the Republic upon the

dissolution of the National Assembly, the nomination of

proposal of the Prime Minister. The current Prime Minister is

the Prime Minister and the other members of the cabinet,

José Sócrates who began his term on 12 March 2005.

the promulgation of laws and decree laws, the naming of ambassadors upon government proposal, and the ratification

In essence, it is up to the Government to guarantee the

of international treaties. The current President of the Republic

operation of the public administration, to promote the

is Aníbal Cavaco Silva, elected on 22 January 2006.

satisfaction of collective needs and guarantee the proper execution of laws. It also has legislative competencies

Legislative powers are vested in the Assembly of the

that in some cases are its own and in other cases the

Republic which is comprised of 230 deputies, elected by

function is shared with the Assembly of the Republic

direct universal suffrage for a term of four years. The next

(relative competence).

elections are due to take place in the second half of 2009. The Courts are the sovereign bodies charged with the The Assembly of the Republic has responsibilities at the

jurisdiction of administering justice in the name of the people.

political, legislative and fiscal levels. Among some of its duties

The Courts are independent and are only subject to the law. 9

aicep Portugal Global Portugal - Country Profile (May 2009) The Constitutional Court has the specific duty to administer

Regions (NUT II) determined by areas

justice in judicial-constitutional matters. It is composed of

Regions

Areas (km2)

% of total

13 judges, of which 10 are designated by the Assembly of

Alentejo

31,551

34.3

Centre

28,200

30.6

North

21,285

23.1

elect the President of the Constitutional Court, have a nine-

Algarve

4,996

5.4

year mandate that cannot be renewed.

Lisbon

2,935

3.2

Azores

the Republic and three co-opted by them. The judges, who

Besides the Constitutional Court, there are also the following types of courts:

2,322

2.5

Madeira

801

0.9

Total (a)

92,090

100.0

Source: INE; Instituto Geográfico Português Note: (a) Includes 362 km2 of interior waterways

a) T he Supreme Court of Justice and the judicial courts of first and second instance b) T he Supreme Administrative Court and the other administrative and fiscal courts

Sub-Regions NUT III Regions of the Continent North

Minho-Lima Cavado

c) The Court of Auditors

Ave Greater Porto Tâmega

There could also exist Maritime Courts, Courts of

Entre Douro e Vouga

Arbitration and Justice of the Peace Courts.

Douro Alto Trás-os-Montes Centre

Baixo Vouga Baixo Mondego

4.2 Administrative organization

Pinhal Litoral Pinhal Interior Norte Dão-Lafões

Following accession to the European Community, for

Pinhal Interior Sul

statistical purposes, the territory of Portugal was classified

Serra da Estrela Beira Interior Norte

according to the Nomenclature of Territorial Units

Beira Interior Sul

(commonly known as the NUT system from the French

Cova da Beira

acronym), to establish similar designations that allow

Oeste

comparisons with other countries within the European

Médio Tejo

Union. Portugal is designated NUT I, divided into 7 NUT II units equivalent to “regions” – North Region; Centre Region; Lisbon Region; Alentejo Region; Algarve Region;

Lisbon

Greater Lisbon Península of Setúbal

Alentejo

Alentejo Litoral Alto Alentejo

the Autonomous Region of Madeira; and the Autonomous

Alentejo Central

Region of the Azores. They in turn are divided into 30 NUT

Baixo Alentejo

III units equivalent to “sub-regions” (28 on the Continent and the two Autonomous Regions).

Lezíria do Tejo Algarve

Algarve

Autonomous Regions The Alentejo and the Centre share among themselves the largest territories in the country, with 34% and 31% of

A. R. Azores

A. R. Azores

A. R. Madeira

A. R. Madeira

the total, respectively, the Autonomous Region of Madeira

Source: INE – Instituto Nacional de Estatística

comprises the smallest area.

(Nomenclature of Territorial Units for Statistics).

Note: This division of regions and their subdivisions is based on the NUTS system

10

aicep Portugal Global Portugal - Country Profile (May 2009) According to the NUTS statistical classification, Portugal is

5. Population

divided into 18 Districts on the Continent and they are the following: Aveiro, Beja, Braga, Bragança, Castelo Branco,

During the first few years of the twenty-first century,

Coimbra, Évora, Faro, Guarda, Leiria, Lisboa, Portalegre,

Portugal remained a country with low fertility, a continuing

Oporto, Santarém, Setúbal, Viana do Castelo, Vila Real,

rise in life expectancy and with a declining net migration

and Viseu. The Districts and the Autonomous Regions are

balance. In 2007, it registered a negative natural balance,

subdivided into 308 Councils/Municipalities and 4,257 towns.

a situation that had only occured once before in 1918, and attributable to the deadly Spanish influenza. The rhythm

The new juridical regime of municipal association1

of population growth is very slow, with immigration flows

determined the organization of municipal associations

remaining the only element of growth while population

which can be classified into two types: for multiple ends or

ageing continues. The reduction in the number of

for specific purposes.

marriages, the sharp rise in births arising from cohabitation, a rising divorce rate, and the higher average marriage age

The municipal associations with multiple purposes,

represent today’s new family models in our country.

denominated intermunicipal communities (CIM), are comprised of municipalities that correspond to one or more

According to the results of the 2001 census, Portugal had

NUTS III and take those names.

at the time 10.3 million inhabitants. This outcome was 5.1% higher than 10 years previously and significantly

Municipal associations with specific purposes were created

higher than had been estimated. The estimates2 made

to achieve those common goals of the municipalities that

after the census and revealed in May 2008 by the

comprise them, in the defense of collective rights of a

National Statistics Institute (INE) point to an increase of

sectoral, regional or local nature.

only 0.17% in the resident population of Portugal in the

Major cities It is worth highlighting the importance of cities, both in terms of geography and politics. There are now 151 cities on the Continent, of which 19 are “District Capitals.” Among the oldest Portuguese cities are Lisbon, Oporto, Viseu, Braga, Coimbra, Évora, Guarda, Lamego, Silves, Faro, Lagos, and Tavira, with pre-Portucalian origins that are repositories of an urban history that is of Roman or Arab origin or sometimes both, as in the case of the cities in the South and even Lisbon.

The city of Lisbon (population of about 650,000 – 2.8 million in Greater Lisbon) is the capital of Portugal since the twelfth century, the largest city in the country, the main economic hub, and has the second largest maritime port and the largest airport. The city of Oporto (about 260,000 inhabitants – 1.1 million in Greater Oporto) is the second largest city.

year 2007 compared with the year before which was due entirely to an increase in immigration (+0.18%), given that the natural population change registered a decline of 0.01% due to the combined effect of the increase in the number of deaths (+1.5%) and the decline in the number of live births (-2.8%).

Furthermore, the trend toward demographic ageing continued due to the decline in fertility and an increase in longevity.

Between 2002 and 2007 the proportion of youth (0-14 years) declined from 15.8% to 15.3%; the share of the active population (15-64) also fell, dropping from 67.5% to 67.2% while the proportion of the elderly population (65 years or older) rose from 16.7% to 17.4% (114 individuals for each 100 persons under 15 years of age).

2 P rovisional estimates until a new census is taken, based on definitive results of the 1 Law nº 45/2008 of 27 August

2001 Census reported at 31 December 2007.

11

aicep Portugal Global Portugal - Country Profile (May 2009)

Resident population of Portugal 2000-2007 Trends 2000

2001

2002

2003

2004

2005

2006

2007

Population on 31 December

10,256,658

10,329,340

10,407,465

10,474,685

10,529,255

10,569,592

10,599,095

10,617,575

Male ratio (%)

93.3

93.4

93.4

93.7

93.7

93.8

93.8

93.8

Total live births

120,008

112,774

114,383

112,515

109,262

109,399

105,351

102,492

Total deaths

105,364

105,092

106,258

108,795

101,932

107,462

101,948

103,512

Net natural increase

14,644

7,682

8,125

3,720

7,330

1,937

3,403

−1,020

Migration balance

47,000

65,000

70,000

63,500

47,240

38,400

26,100

19,500

Population change

61,644

72,682

78,125

67,220

54,570

40,337

29,503

18,480

Natural growth (%)

0.14

0.07

0.08

0.04

0.07

0.02

0.03

−0.01

Migratory growth (%)

0.46

0.63

0.68

0.61

0.45

0.36

0.25

0.18

Actual growth (%)

0.60

0.71

0.75

0.64

0.52

0.38

0.28

0.17

Source: Instituto Nacional de Estatística – Provisional estimates of the resident population, 2007.

The overall data concerning 2008 indicate a population growth of 0.2%, implying an estimated resident population for Portugal of 10,623 thousand inhabitants. According to the same source, using a baseline projection scenario for the resident population for the 2000-2050

Regional breakdown Populationb

% of total

Density (inhab./km2)

North

3,745,236

35.27

176

Lisbon

2,808,414

26.45

957

Centre

2,385,911

22.47

85

Regionsa

period, assuming the trends currently observed will

Alentejo

760,933

7.17

24

continue, then Portugal will lose close to 12% of its

Algarve

426,386

4.02

85

population between 2010 and 2050.

Madeira

246,689

2.32

308

Azores

244,006

2.30

105

Totala

10,617,575

100.0

115

5.1 Regional breakdown

Source: INE – Instituto Nacional de Estatística Notes: (a) Regions based on NUTS (Nomenclature of Territorial Units for Statistics); (b) 2007 estimates

More than three-fifths of the Portuguese population is concentrated in the North Region (which includes the city of Oporto) and the Lisbon Region. The population decline

Population growth has been greater around the coastal

in the rural areas of the interior have continued to affect

areas of the Algarve, reaching 15.8% in the decade of the

part of the North Region (excluding Oporto), the Centre

1990s, probably reflecting an increase in the number of

and above all, the Alentejo.

pensioners who have chosen to retire in this tourist region. 12

aicep Portugal Global Portugal - Country Profile (May 2009) As a result, the population distribution around the territory

5.2 Migrations

of the continent shows a contrast between the coast and the interior of the country.

The contribution of migration to the dynamics of population growth depends on the interpretation, the

Similar to what was being observed throughout the

inherent characteristics and its duration. Since 1993,

country, in 2007 population growth was positive, except

net migration has been the primary source of Portugal’s

in the Centre region where there was zero growth due

population growth.

to the fact that migratory growth was not sufficient to compensate for the natural change which was negative,

Portugal experienced inflows of immigrants from its former

and in the Alentejo where there was an actual decline in

colonies in Africa, from Central and Eastern Europe,

the resident population. The Algarve is the region with the

and more recently from Brazil, but there were also small

highest effective population growth in 2007, sustained by a

groups of immigrants that originated from India, China

very high rate of migration growth.

and Pakistan, as well as from some other countries of Latin America and the northern part of Africa.

In analyzing the demographic density of the Portuguese population according to the various regions of the country,

Economic immigration is a recent phenomenon and

Lisbon is the clear leader. In second place is Madeira with

represents a radical change compared with what took

about 1/3 the population density of the first. The greatest

place in the 1960s and 1970s when many Portuguese

gap seems to lie in the North Region which, apart from

used to emigrate in search of a better life. About 4.5

having, in relative terms, the largest resident population,

million Portuguese live outside the country, a figure

shows a population density about 5½ times lower than

that is equivalent to nearly half of the domestic resident

that of Lisbon. Then follow the Autonomous Region of the

population. Very large communities of expatriates exist in

Azores, the Centre Region, the Algarve (the latter two are

Brazil, France, Germany, Switzerland, Luxembourg, Canada,

roughly the same), and finally the Alentejo, with the lowest

and South Africa, among other countries.

ratio of inhabitants/km2. Until the 1990s, most of the immigrants to Portugal came In the coastal stretch between Viana do Castelo and Setúbal,

from Portuguese speaking countries, especially Cape Verde

one can spot two areas with particularly high densities,

and Angola. Beginning in 1999, Portugal began to receive

centered around the cities of Lisbon and Oporto. In fact, the

a different and massive kind of immigration coming from

13 cities with the highest number of inhabitants per km are

the Eastern European countries, divided into two groups:

part of the Greater Metropolitan Areas: in Lisbon - Amadora,

the Slavs – Ukrainians, Russians and Bulgarians; and the

Lisbon, Odivelas, Oeiras, Barreiro, Almada, Cascais, and

Latin people from the east – Romanians and Moldavians.

2

Seixal; in Oporto - Oporto, São João da Madeira, Matosinhos, Vila Nova de Gaia, Valongo, and Maia. This phenomenon also

In 2003, this type of immigration fell, having been

extends to other metropolitan areas, including most of the

substituted by Brazilians and, to a lesser extent, by Asians

towns in the Algarve. On the other hand, a group of towns

of various origins (namely Indians, Pakistanis and Chinese).

formed by Cinfães, Baião, Lamego, Resende, Mesão-Frio, Peso da Régua, Santa Marta de Penaguião, Tabuaço, Funchal,

In 2007, there lived in Portugal 401,612 citizens of foreign

Coimbra, Castanheira de Pêra, and Nazaré, experienced a

nationality with legal residency status, of which nearly

decline in their resident population.

41.9% were of European origin (due maily to persons from 13

aicep Portugal Global Portugal - Country Profile (May 2009) Eastern Europe), surpassing the number of nationals from

employment in the services sector (59% of the total in

African countries (34.4%).

2008), a trend that also has been observed in our other European partners.

The foreign population is much younger than the native population and comprises mostly members of the active labour force. Classified by gender, the men are the larger

Trends in population employed by sector of activity 1986

component, being the mostly lilkely to emigrate while their family members follow later and then they tend to provide a more balanced situation.

2006

2007

2008

(%) Agriculture, forestry and fishing

21.9

11.7

11.6

11.5

Industry, construction, energy & water

33.7

30.6

30.5

29.3

Services

44.3

57.7

57.9

59.3

Concerning Portuguese emigration, at first there was a big movement to Brazil that occurred at the beginning of the past century that lasted until the 1920s, followed by

Source: INE – Instituto Nacional de Estatística

a trend towards Europe that occurred during the period of the colonial wars in the 1960s. Both were for periods of long duration. Starting at about the end of the 1980s, there have been emigration flows that have a more temporary nature and which continue today.

5.3 Active population

5.4 Schooling levels of the active population Within the framework of the demands of the new global economy, the qualification of persons in the labour force is a major factor affecting competitiveness, economic growth, employment, and possible salary improvement.

Immigration now is helping to sustain the population in the labour force, whose rate of growth has not been able to compensate for the ageing of the population and the increase in life expectancy (74 years for men and 80.6

Portugal shows some not so positive indicators as to the education and skill level of its active population that have been the focus of public policy regarding human resources.

years for women, according to the OECD), a factor which is affecting not only Portugal, but the vast majority of

With the objective of making secondary education the

Western European countries.

basic minimum standard for Portuguese youth and adults and thus contributing, in the medium term, to increase

At the end of 2008, the active population was 5,624.9

the country’s competitiveness and boost employment and

thousands, while the employed population stood at

salaries, the New Opportunities Program (Programa Novas

5,197.8 thousands. The activity rate (active population

Oportunidades) was launched, based on two fundamental

as a percentage of total population) was 53% and

points: to allow the qualification of a million persons in

between the active population (15 years or older) the

the active population by 2010, and expand the number

activity rate was 62.5%.

of qualifying professional courses at the secondary level in order that they represent, within the same time frame, half

In terms of the short/medium term, the distribution of

of the total offers at the secondary level.

population employed by sectors of activity is relatively stable. There has been a movement going on for the past

The participation of the adult population in this initiative

25 or 30 years towards a greater number of people finding

has been very high. Since 2007 and up to 31 August 2008, 14

aicep Portugal Global Portugal - Country Profile (May 2009) more than 447,000 candidates had enrolled, of which

enrollment. There are throughout the country 269 New

92,351 obtained a primary school certification (4,021

Opportunities Centres, supported by public and private

obtained secondary certification).

entities, namely schools in the public network of the Ministry of Education.

The impact of the New Opportunities Initiative is already evident from the following indicators: the rise in the number of matriculated students in the different levels of instruction, implying an increase of almost 21,000 students in the system, particularly towards the professional courses at the secondary level; the increase in the number of students who enter higher education; a reduction in the failure and dropout rates in elementary and secondary education (at the elementary level that rate fell from 11.5% in 2004-2005 to 10% in 2006-2007; and in secondary education, for the same years, the rate declined from 31.9% to 24.6%); a reduction in the rate for early leavers (in 2007 in was 36.3% compared with 38.6% in 2005); an increase in the percent of youth between the ages of 20 and 24 who at least complete secondary education from 49% in 2005 to 53.4% in 2007.

6. Infrastructures With the assistance of European Community Funds during the past several years, Portugal was able to make a strong investment effort to improve transport infrastructure and that has resulted in modern networks of motorways, railways, airports, and maritime ports.

Although maritime transport continues to be the major mode of transport in Portugal’s foreign trade, railway transport has assumed a growing importance, especially in connection with European markets. With the completion of the high speed railway (TGV) project, this transport mode will become yet another alternative for the rapid movement of merchandise.

Currently, 73% of the public secondary schools offer professional courses, which is within reach of the goal defined for 2010, namely 100%. In 2007-2008, more

6.1 Roadway network

than 120,000 students were matriculated, with more than 29,000 registered as studying professional courses. Also at the secondary level of education, there were about 120,764 students matriculated in courses leading to a double certification, with the expectation that in 20082009 the number of students would exceed 140,000.

Portugal today has one of the most developed roadway systems in Europe, including highways (Auto-estradas, AE). Portugal has one of the largest AE networks in the EU 15, both as to km per inhabitant as well as for area, most of which were built in the last 10 years, with a length currently reaching 2,860 km and with one of the

In so far as Technological Specialization Courses (Cursos

most advanced electronic toll systems in the world; Main

de Especialização Tecnológica or CET) are concerned, more

Trunk Roads (Itinerários Principais, IP), Secondary Roads

than 257 new courses were created in the higher education

(Itinerários Complementares, IC); National Roads (Estradas

institutes, with more than 60% in the technology area

Nacionais, EN); and Municipal Roads (Estradas Municipais),

and more than 75% are operational in public polytechnic

which account for 22,000 km of paved roadways.

institutes. The number of graduates in 2007 reached 878, whereas the year before they had been only 233.

In the 1990s there was a significant development of roadway infrastructure in Portugal and one factor

The expansion of the New Opportunities Centres network

contributing to this development was the event of the

contributed in a major way to the significant in crease in

Lisbon World’s Fair in 1998. This major project acted as a 15

aicep Portugal Global Portugal - Country Profile (May 2009) catalyst for the construction of major public works, such

system as the European and trans-European railway transport.

as the second bridge over the Tagus River – the Vasco

One of the key projects in the government’s infrastructure

da Gama Bridge – and the railway line that was built on

program is the construction of a high speed line linking

the existing 25th of April Bridge, establishing for the first

Oporto, Lisbon and Madrid and three other Spanish cities,

time, a continuous railway link between the northern

to facilitate not only access to our neighbouring country but

and southern parts of the country. These infrastructures

primarily to the rest of Europe.

contributed in a significant way to improve north-south traffic and create new access routes in various parts of the

The existing railway network is 3,600 km, of which 2,839 ©José Manuel

km with railway traffic, which serves a population of approximately 8.5 million inhabitants and assures NorthSouth links along the coastal strip of the Portuguese continent as well as transversal links. The railway network density tends to be greater in regions where there are greater concentrations of population.

On the horizon for 2015 various projects are planned, including the construction of 12 new conventional train lines, for passengers and freight, which represent a total investment of around 1.1% of the country’s GDP.

According to INE, the volume of goods transported in 2007 was close to 10 thousand tons. In analyzing the regional contributions of goods transported, Lisbon and the Alentejo (basically due to cargo shipments entering into the Port of Sines), were the regions of origin that registered the highest volume of goods transported (more tha seven million tons), and these accounted for 73% of total volume. Lisbon and the North are the major destination Vasco da Gama bridge – Tagus River

regions, having received in total more than 66% of total merchandise shipped by other regions.

capital, mostly in the eastern part of the city of Lisbon. ©José Manuel

With the launch of the plan which covers 10 new roadway concessions, the network will expand by about 50% (1,316 km of new roads, 612 km of which will be designated AE).

6.2 Railway network The biggest challenge in this area is to strengthen the integration of the national railway system with the Iberian and European network, in order to assure the same operating

Gare do Oriente (East station) – Parque das Nações (Park of Nations)

16

aicep Portugal Global Portugal - Country Profile (May 2009)

6.3 Ports

natural conditions along the Portuguese coast to handle all types of ships. Endowed with modern terminals it

The geographical position of Portugal, with an extensive

has unequalled characteristics, being on the one hand

Atlantic coastline, offers excellent conditions to promote

the principal gateway for the country’s energy supply

and develop maritime connections.

(petroleum derivatives, coal and natural gas), and on the other an important cargo container port with strong

On the continent there are nine ports: Viana do Castelo and

growth potential. This port uses the latest generation

Leixões, in the North Region; Aveiro and Figueira da Foz,

technology platforms, named “Sole Port Window” (“Janela

in the Centre; Lisbon and Setúbal, in the region of Greater

Única Portuária”) that allows the rapid dispatch of ships

Lisbon; Sines, in the Alentejo; Faro and Portimão, in the

and goods, that links all the participants involved both

Algarve. The Autonomous Region of the Azores has five ports

public and private, permitting economic agents to interact

and the Autonomous Region of Madeira has three.

with all the necessary authorities and all port services through a single electronic platform.

The principal function of the port infrastructure is the transportation of goods, with the major ports being Sines

In 2008 GALP Energia was granted a concession of the

(accounting for 40% of the total in 2008), Leixões (25%)

Liquid Graneis Terminal and the integrated management

and Lisbon (20%). In the ports of Lisbon, Sines and Funchal

of residues, the Terminal XXI began utilizing the “Lion

there is passenger traffic but very little such activity in

Service”3 and work to enlarge and lengthen its pier to

Oporto and Leixões.

allow cargo capacity up to 800,000 TEUs.

© Câmara Municipal de Sines

This port, with its industrial zone and advanced logistics, with more than 2,000 hectares is already a multifaceted logistics platform on an international scale (maritime-port, industrial and logistical), that will count on full integration with the urban national platform of Poceirão and with the cross-border platform of Elvas/Caia.

6.4 Airports Portugal’s air transport system includes a network of 14 airports. On the continent there are three international airports, all situated on the coastal border, with a new Port of Sines – Alentejo

international airport on the drawing board for Lisbon, on the southern edge of the city, in the Alcochete zone.

The five main Portuguese ports Sines, Lisbon, Setúbal, Aveiro and Leixões moved 63.3 million tons of freight in 2008, rwegistering a slight decline of 1.9% from 2007.

3 N  ew regular direct service Far East/Sines, resulting from the agreement between MSC, Mediterranean Shipping Company and PSA/Sines. With weekly frequency, it will use 8 Ultra-Large Container Vessels, with an average capacity of between 8000 and 9500 TEUs, which will allow a substantial decline in transit time (Singapore-Sines 11 days,

The deep water port of Sines, the national leader when

Hong Kong-Sines 17 days and Shanghai-Sines 20 days), thereby assuring a strong

it comes to the quantity of goods moved, boasts unique

entry in Europe for Asian goods transported on this maritime line.

competitive advantage, and conferring on the Port of Sines the status of top port of

17

aicep Portugal Global Portugal - Country Profile (May 2009) The fact that the autonomous regions are made up of

Portugal Telecom (PT), continues to be the principal

islands explains the presence of their larger number of

provider of telecommunications services, above all in

airports, as can be seen in the following table.

fixed lines, with a 72% market share in 2007. The mobile telecommunications market is served by three operators:

Main Portuguese airports Aeroportos

Número

TMN - Telecomunicações Móveis Nacionais (Portugal Localizações

Telecom), Vodafone Portugal (Vodafone - United Kingdom)

Continent

3

Lisbon, Oporto and Faro

and Optimus (Sonae and France Télécom’s Orange – 20%

9

Ponta Delgada, Santa Maria, Horta, Flores, Corvo, Graciosa, Pico, São Jorge, Terceira

of the capital), which have had third generation (3G)

A. R. Azores

A. R. Madeira

2

Funchal and Porto Santo

service available since 2004. In 2007, a new mobile service appeared designated phone-ix launched by CTT which uses, by agreement, the physical network of TMN.

Most international airlines serve the principal airports of the

With the arrival of third generation mobile networks, Internet

country. TAP Portugal is the Portuguese national air carrier.

access in broadband and TV distribution were made available to mobile network clients. Today in Portugal satellite networks

In 2008, air traffic in Portugal increased 2.5%, as measured

are used primarily to provide TV distribution services.

by the number or flights landed at Portuguese airports, was up 2.7% with regard to passenger travel and rose 3.1% in cargo transport. The airports of Lisbon, Oporto and Faro were responsible for most of the increase in the number of passengers, and Lisbon and Oporto for the increase noted in terms of freight transported.

6.5 Technological infrastructures In the last few years, infrastructures relating to the telecommunications sector were substantially improved and modernized, allowing Portugal to stand in a comfortable spot among its European partners. In this area there are three types of systems: a voice system (fixed line telephone and mobile); data services (Internet access) and video service (TV signal), and three types of networks: traditional fixed network, mobile network and TV distribution by satellite, cable and other radio-electric means.

Optic fibber

According to a report published by ANACOM4, the development of the various networks and means of access to telecommunications systems was as follows: the mobile networks have increased their lead by growing on average about 8% per year between 2005 and 2007. (In 2007, Portugal had 127 subscribers per 100 inhabitants whereas

The deregulation of fixed and mobile networks and

the EU15 had only 115.) Meanwhile, the traditional fixed

the entry of new telecommunications operators in the Portuguese market increased competition, improved quality and reduced rates charged.

4 A  NACOM - Autoridade Nacional de Comunicações (The National Communications Authority)

18

aicep Portugal Global Portugal - Country Profile (May 2009) network has tended to decline, on average, about 1% per annum. (It represents only one-fourth of total access.) In 2007,

Owners of electronic communication services as per NUTS II and household size Mobile Telephone

the market penetration rate of cable distribution networks in number of subscribers per household was 27% but rose to

Fixed-line Telephone

Internet

Television

Regions (NUTS II) (%)

39% when considering only households with cable access.

North

91

45

48

43

Lastly, the number of clients with access to Internet rose from

Centre

87

68

48

35

about 900,000 in 2003 to more than 1.6 million in 2007, with

Lisbon

93

54

58

69

84% of the total accounted for by residential clients.

Alentejo

91

58

44

38

Algarve

90

58

52

43

A.R. Azores

82

71

43

78

The results of a Survey of Electronic Communications Use

A.R. Madeira

88

54

46

80

taken in December 2007 by the same organization were

Number of individuals per household

as follows: of households with electronic communications,

1

34

39

90 % had mobile telephone service (30% through 3G equipment), about 56% had fixed line telephone service, although this has been on a declining trend for some time, 51% had access to Internet service and 51% pay television service. It should be pointed out that about 17% of those surveyed acquired services in a package deal. The doubleplay (Internet and television) prevailed with 48% of the

80

51

2

85

64

37

47

3

93

53

62

58

4

94

53

64

56

5 or more

93

54

60

52

Households with children

96

45

60

57

Households without children

87

61

47

48

Source: Survey on Electronic and Communication Services, December 2007

total and triple-play (TV, fixed line telephone and Internet) with 19% of households with package deals.

At the regional level, Lisbon, the North, Alentejo, and Algarve stand out with with penetration rates for mobile

The majority of users who acquire service packages in Portugal are clients of cable TV distribution operators. Moreover, the choice of double and triple-play that combine TV and Internet represent an intensity of usage that is above the European average.

telephone sevice penetration of 90 per 100 inhabitants. The Azores region is the only one where fixed line telephone service exceeds 70 per 100 inhabitants. The only regions where Internet penetration exceeded 50 out of 100 inhabitants are Lisbon and the Algarve. In addition, pay television service in the autonomous regions accounts for a penetration rate of 80 per 100 inhabitants.

According to INE, in 2007, 95% of all Portuguese businesses used personal computers, while 77% had broadband Internet access.

There is an important campaign to bring people closer to the new technologies (including Internet) and an effort by the public sector to make available various kinds of services electronically, aiming to facilitate engagement by citizens and businesses. 19

aicep Portugal Global Portugal - Country Profile (May 2009)

6.6 Policies for the future According to the State Budget for 2009, the policy strategy of the Ministry of Public Works, Transport and Communications intends to assure proper conditions in mobility and communications as essential elements for the quality of life of all citizens, as well as the competitiveness of the regions and territorial and social cohesion. We have adopted as our objectives the promotion of sustainable transportation policies that respect the environment in order to develop and reinforce the intermodality, the interoperability and the integration of the Iberian, European and transatlantic transportation networks, thus strengthening Portugal’s role as a logistical Additionally, the government together with the operators,

platform within the European and global space.

began an initiative called “e-school” (e-escola) aimed at students, teachers, and adults in the process of requalifying,

Concerning the roadway sector, the system of access to

thus promoting the spread of broadband mobiles in Portugal,

regular passenger transport, which dates back to 1948, will be

as a complement to the existing fixed broadband and, more

reviewed, a Public Transport Intermodal Plan will be launched,

recently, adopted another initiative “e-little school” (e-escolinha)

providing support and investment in improved standards

that will allow about 500,000 children in the first cycle of basic

and safety in public transportation and in the technological

education to have access to Magalhães portable computers.

modernization and improvement of its energy efficiency.

According to the European Commission5, Portugal is the

As the National Highway Network is concluded, about 50

third country among the EU27 where mobile broadband is

km of national highways will be open to traffic. Within

becoming an alternative to the fixed broadband, given that the

the scope of monitoring and modernization of the same

number of connections is equivalent to 8.3% of the population

network, there will be a program of concessions to build

(and that is above the community average of 2.8%), surpassed

new fundamental highway centres, especially IP ansd

only by Austria and Finland (11.4% and 9.1%, respectively).

IC, and approval of the annual plan of maintenance and improvement of the existing network.

Lastly, it is worth highlighting some data published by the Telecommunications Barometer of Marktest which is

As for the Conventional Railroad Network, there will be

quite illustrative of the penetration rate of new technology

interventions in order to eliminate railway bottlenecks

among the Portuguese population: 2.3 million Portuguese

affecting the transportation of goods, and there will be

used MMS (December 2008), 2.6 million Portuguese

construction of spurs that will permit access to ports

already had at their disposal mobile phones of the latest

and other places (logistical platforms, etc.), among other

generation (July 2008), 1.7 million Portuguese used

actions. Investments in the improvement and enlargement

bluetooth mobile phones (December 2007).

of the network will continue, as for example, the linkup of the Port of Aveiro to the North Line and the linkup Sines-

5 Report on telecommunications progress in the single market in 2008

Elvas in the South Line. 20

aicep Portugal Global Portugal - Country Profile (May 2009) In order to build a High Speed Rail Network, bids will be

the startup of the construction of the cross-border platform

proposed to allocate the public-private shares, in order to

of Elvas/Caia and the execution of the infrastructures for

develop the high priority axis.

the logistical platform of the Porto of Aveiro (ZALI).

As concerns Urban Transit, modernization of the Sintra,

Concerning new services and new information technologies,

Alentejo, Minho and Cascais lines will continue, as will the

there will be implementaion of land digital television and

extension and modernization of the Lisbon Metro, through

plans to proceed with the appraisal of and preparation for the

a series of measures that will be implemented with the

necessary measures to close down analog television service.

purpose of improving the mobility of urban transit and the service provided.

In the energy sector, plans will be carried out to promote and anticipate investment plans for the transport network

As concerns the Maritime-Port System, the already identified priority areas will be realized within the strategic orientation defined for this sector towards the end of 2006 and the modernization work will continue at the ports of Viana do Castelo, Aveiro, Figueira da Foz, Lisbon (the Santa Apolónia Cruise Ship Terminal and the Container Terminal of Alcântara), Setúbal, and Sines. Also in the planning stage is the enlargement of the “Vessel Traffic System” in the Azores and Madeira regions.

of very high tension electrical energy, primarily through the construction of new infrastructures within the network. Private investment will supply a major impulse to economic activity that will involve about one hundred qualified providers in sectors such as the cable industry, metalmachinery, electrical equipment, and construction.

The state will also invest in solutions to attain improved energy efficiency in many government buildings which use up a lot of energy (hospitals, universities, courts, public spaces, etc.), and that also will provide some dynamism to

In the Air Transport sector there will continue to be expansion and improvement of national airports that include the

the activity of various sectors, in order to attain direct gains in reducing costs related to energy.

expansion work at the Lisbon Airport (Portela), in order to meet increased demand until 2017. Consolidation measures will

There are also plans for making investments in intelligent

continue to be implemented at the Sá Carneiro airport as the

energy networks in order to provide 10% of all national,

principal airport of the Northeast Peninsula, primarily through

domestic consumers of electricity with intelligent systems

the opening of new routes and destinations and to capture

of measuring energy consumption, allowing the consumer

traffic in the North region as well as in Galicia. Plans to expand

to optimize consumption while reducing cost, to automate

and remodel the Faro Airport and to expand the John Paul II

network management and improve service quality, and to

Airport in the Azores also will be carried out.

develop energy efficiency and environmental sustainability. These investments will allow the creation of a cluster of

The air traffic control system will be preparing to meet

equipment production and will have a strong impact on the

the demands of the implementation of the Single

construction sector for its installation.

European Sky system. Regarding the Information Society, the wager in its In 2009, the development of the Portugal Logistics plan

development passes through aid to investments in new

will continue with the beginning of the construction of the

generation broadband on the part of communications

logistics platform at Leixões, the startup of the first spaces

operators, with significant impact on the efficency of the

of the platforms at Castanheira do Ribatejo and Poceirão,

economy as a whole and of economic agents. 21

aicep Portugal Global Portugal - Country Profile (May 2009)

7. Resources and Productive Structure

sector accounts for 59.3% of employment and 74% of gross value added (GVA), whereas the agricultural sector

In the past few decades, Portugal, not unlike its European

only provides 11.5% of employment and contributes

partners, saw its economic development become

merely 2.4% of GVA. Industry, construction, energy, and

increasingly based on services. At the present time, this

water represent 29.3% of employment and 24% of GVA.

Gross Value Added by Sectors of Economic Activity

2006

Employment by Sectors of Economic Activity

2007

2008

2006

2007

Agriculture, forestry and fishing

Agriculture, forestry and fishing

Industry, construction, energy, and water

Industry, construction, energy, and water

Services

2008

Services

Source: INE (2000 basis)

Source: INE – Employment Survey

Regional Gross Value Added by Sector of Economic Activity in 2007

Portugal

North

Centre

Lisbon

Alentejo

Algarve

A.R. Azores

A.R. Madeira

Agriculture, hunting and forestry, fishing and aquaculture

Trade; lodging and restaurant services; transports; and communications

Industry, including energy

Financial activities, real estate, rentals, and services to companies

Construction

Other service activities

Source: INE – Definitive Regional Accounts, 2006 and Preliminary data for 2007 (2000 basis)

22

aicep Portugal Global Portugal - Country Profile (May 2009) As for the regional distribution of GVA, the table below

7.1 Agriculture, forestry and fishing

shows that according to preliminary data, in 2007 the services sector dominated productive activity in all seven Portuguese regions. The contribution of service activities was particularly high in the Algarve, Madeira and in Lisbon. The primary sector continues to lose ground, although it still is important in the Azores region and in the Alentejo. In the latter region, there was a notable shift from the primary sector to the secondary in the last few

Agriculture Despite the reduced role of this sector in the overall economy over the past few decades, agriculture is an important source of employment in Portugal (11.5% of the total in 2008, including forestry and fishing). The agricultural sector has undergone a few structural adjustments, namely the increase in areas allocated to agriculture and the introduction of new production

years. (In 2004, agriculture accounted for 13% of the

processes, even though there continue to be disparities at

total GVA, and industry 20%.)

the sectoral and regional levels.

As for the contribution to GDP of each sector of economic

On the Continent, the principal cultivations show the

activity, the Economist Intelligence Unit (EIU) calculates that

following distribution: pastures, meadows, and grazing

in 2007 services accounted for 71.8% of GDP in constant prices, which represents an increase of 15% compared with 2000. Industry, including the energy sector, in the past few years has been declining as a share of GDP (-19% in seven years). Over the same period, agriculture saw its share decline by roughly half.

areas 59%; cereals 11%; olives 9%; vineyards 5%; fruit 4%; and horticulture 2%. Relating to these cultivations, the Alentejo stands out because of its reduced areas of olives, wines, fruits, and garden vegetables while in the Algarve over 40% of its area is devoted to these cultivations. In terms of the Continental territory, permanent agricultural plantings, especially vineyards and olive groves, are found primarily in the interior of the country, from North to South, whereas forest areas are located primarily from the centre

Productive Structure

to the coastline. In the Azores, about 95% of agricultural land under cultivation is given over to pastures, meadows, and grazing areas and in Madeira 77% of total land is devoted to permanent cultivations.

Agricultural cultivation and output has evolved in the past few decades, showing significant changes above all in annual crops (cereals, oils, and forage products), which declined sharply sarting with 1997, and in the meadows Agriculture,

Industry (including

forestry

construction

and fishing

& energy)

Services

and grazing areas (partially covered clean land) which as of the same date, grow in a similar manner. As a result, there has been a transfer in the use of cultivated areas away from annual crops to permanent pastures.

2000

2007

2008

Permanent cultivations have experienced declines, with Sources: EIU – Economist Intelligence Unit – Viewswire Note: Based on GDP at factor cost

vineyards and olive growing areas contributing to this change. In the first case, since 1980 areas of vineyards 23

aicep Portugal Global Portugal - Country Profile (May 2009) have decreased by about 30%. The improvement in the

methods went into effect. This measure requires forage

average size of exploitations, which led to a near doubling

from this type of production for animal feed. The Alentejo

of the average area under cultivation (0.66 to 1.1 hectares)

now has the largest area and the largest number of

together with the increase in consumer demand, have

certified producers (39%), followed by Beira Interior,

contributed to an improvement in productivity in the wine

respectively with 62% and 22% of total area in 2006.

sector. The most important vineyard areas are concentrated in the Douro Valley. As for the other, mechanization of

Once this kind of farming became predominant in these

harvests and renewal of some of the olive groves, intensive

regions, one could observe a sharp increase in areas devoted to

and super intensive plantings as well as the modernization

grazing/forage, arable crops and olive groves, which respectively

of the wine presses, brand certification for olive oil and the

accounted for 68%, 19% and 9% of the total area.

rediscovery of olive oil on the part of consumers, have led to a renewed interest by farmers for these cultivations.

In the region of Trás-os-Montes olive groves continue to predominate, but areas given over to organic farming of

Wine, fresh fruits (apples, pears, peaches, and citrus fruits

dried fruits are also significant. This region groups together

account for 75% of total orchard areas in our country)

about 23% of the total number of producers, although

and vegetables are the main agricultural products grown

in terms of area it does not exeed 4% of the total land

and they represent almost one-third of total domestic

devoted to organic farming.

agricultural production. Another factor fostering development of organic farming A series of measures have been taken within the context of

in Portugal concerns agro-environmental measures which

the National Agricultural Plan which are designed to give

made financial assistance available, thus attracting the

the country a more developed agricultural sector that is

participation of new producers. Since 2003, the area

competitive and produces quality products while taking into

designated eligible for assistance increased 114%, enabling

consideration the social importance of this sector.

the number of potential producers to rise 86%.

Organic farming

In so far as the raising of animals in accordance with

Since the beginning of the 1990s, there has been an

biological norms is concerned, data are available only

exponential increase in biological agriculture or organic

beginning in 2002 and that is due to the fact that the

farming (production areas and number of producers

respective legislation only went into effect in 1999 and that

who converted their lands to such production). Between

the period required to convert agricultural holdings ranges

1993 and 2006 organic farming lands increased nearly

from two to three years. Even so, there was a considerable

a hundredfold, rising from 2,799 hectares to 214,232

increase. Animal production increased about 439%

hectares, and that is about 6% of all land under cultivation.

between 2002 and 2006 and the number of producers rose from 141 to 616 in this period (+337%).

In 1995, the region with the largest area devoted to organic farming was Trás-os-Montes (41%), with olive

In regional terms, the largest number of organic producers

cultivation predominating (52% of the total). Beginning

can be found in the Alentejo and in Beira Interior,

in 1996, the Alentejo became the largest area as a result

respectively 54% and 27% of all producers in 2006, and

of compliance with required controls and certification,

so too the corresponding animal production, 69% and

especially since the community (EU) regulation applying

16%, respectively. Cattle raising dominates organic animal

to raising animals in accordance with organic production

production (75% in 2006), and they can be found mainly 24

aicep Portugal Global Portugal - Country Profile (May 2009) in the regions of Alentejo, Ribatejo and Oeste and Beira

The eucalyptus is also an important element found in the

Interior, followed by sheep (18%), raised mainly in Trás-os-

Portuguese countryside. Besides its exceptional properties that

Montes, the Algarve and Beira Interior.

are useful for the production of quality wood pulp, its growth cycle gives it importance from an economic standpoint. This

Although it is a relatively recent phenomenon, several

fact, together with the development of a dynamic industrial

national organic products have been awarded international

sector, was responsible for a rapid increase of its importance

prizes. Worth highlighting is the first prize given to “Azeite

in the last three decades, including the development of the

Virgem Extra” of Herdade Fonte Corcho in Serpa (Alentejo),

cellulose industry and of the private sector.

in the area of “World Competition of Biological Olive Oils” that took place at the BIOFACH Fair in 2009 in Germany.

Forestry The importance of forests and the forestry sector in Portugal is unquestionable. This is due to large areas covered by forests; to the relevance of its economic, environmental, social, and cultural importance; to its importance in the manufacturing industry that is based on a renewable, natural resource; to the assurance of the existence of recyclable and reusable products that generate employment and profitability; and even by the large number of agents involved in the production, transformation and commercialization of forest products. Forests occupy about 36% of the territory of Continental Portugal, representing different rates of arborization according to the various regions of the country.

In the Azores, more than 64% of the forest area is covered by incense and natural vegetation, with criptoméria representing more than 60 % of forest production.

In Madeira, 32% of forest space is covered by the laurissilva species and the remaining area is occupied by exotic species (eucalyptus, pine and others).

Fishing The need to preserve existing resources and maintain the economic viability of the fishing industry are the top priorities of this sector.

The year 2007 saw a decline of 1.4% in the number of registered fishing ship captains compared with the previous year, which was equivalent to an employment level of about 17,000 fishermen. This decline resulted from the lower number

There are many species that comprise the country’s forests:

of fishermen registered in dredging and hauling On the

the three most common are the pine (Pinus pinaster), cork

other hand there was an increase in the number of fishermen

(Quercus suber) and the eucalyptus (Eucalyptus spp.) and

licensed to fish in “non-maritime interior waters,” particularly

are also the most important in an economic sense. Together

in the captaincy of Viana do Castelo and Aveiro.

they account for nearly 75 % of the forest area. In the same year the national fishing fleet totaled 8,637 The pine tree is the one forest species that covers the

vessels, representing a certain stability compared with the

largest area (mostly in the Centre region and the Coastal

previous year, both as to number (-1%), and as to gauging

North of the country) and is the main sustenace for logging

(-0,2% GT) and also in power (+0,4% kW). The fleet is

and agglomerates. The cork tree occupies a territory that is

comprised of 45 captaincies, of which 32 are located on

equal to about 25% of its natural global distribution. The

the Continente, 11 in the Azores and two in Madeira.

economic importance of this species is reflected in the fact that Portugal is the world’s foremost manufacturer of cork

The number of fishing licenses issued in 2007 was on

products, in particular bottle corks.

average four licenses per vessel, which represented an 25

aicep Portugal Global Portugal - Country Profile (May 2009) increase of 2.4% compared with the previous year.

compared with the other regions. The Minas de Neves

The Centre Region held the largest number of registered

Corvo are also responsible for being the major employer

fishing vessels in 2007 (23.9% of the total) and the largent

in the region of Castro-Verde-Almodôvar (more than 800

number of vessels for deepwater fishing (41%).

workers) and contributes in a significant manner to the high level of regional GDP.

In terms of fish catches, in 2007 a total of 161 thousand tons of fish were caught, unloaded as fresh or refrigerated

Following in terms of relative importance, is the Centre

in bulk, representing an increase of 13.5%in volume

Region where the second most important mining operation

caught and 12.7% in value, compared with the previous

in the country is located – the Panasqueira mine, which

year. Contributing to this increase was a rise in catches of

produces the mineral wolfram.

marine fish and shellfish. Fishing activity in the Azores and the Continent were what contributed most to to this good

Beginning with the middle of the 1990s, the importance

performance (33.9% and 12.9% in volume and 19.9% and

in the value terms of the mining subsector fell as a

11.3% in value, respectively).

consequence of the accentuated decline of the base metals, precious metals and mineral energy, due to the

Concerning fish production, that is, the total of fresh and

drop in international prices of basic and precious metals

refrigerated fish, frozen and caught in external fishing

and the decline in the seen in the production of energy

boats, Portugal saw its production increase about 11%

minerals (coal and uranium), whose production units were

compared with 2006, sustained by the increase in catches

located in the North and Centre Regions, respectively.

in the Northeast Atlantic and in national waters. Ferro-magnesium, tin, titanium, wolfram, copper, uranium, Although the country enjoys natural conditions favorable

quartz, talcum, and kaolin are the products extracted,

to the development of aquaculture, its output has been

among others, from mines in operation.

less than expected, accounting for only a slight share in the total production of the sector. Nevertheless, data for the

The strong points of this sector include the geographical

year 2006 show an increase in total production of 3.4%

potential of the Portuguese territory, the quality of

from the year before, with the Algarve being the region

raw materials destined for the ceramics industry, the

with the largest share in the total.

existence of dynamic companies, the ample technological infrastructures, and a sound industrial base for developing international markets.

7.2 Industry In the subsector quarrying, which includes ornamental stones

Mining

and industrial stones, there has been a considerable pace of

The development of the mining industry (mining, quarrying

growth, due first of all to an increase in competitiveness of the

and water) shows a sharp alteration experienced by the

firms operating there, as a result of internal valuation of the

subsector mines, due to the extraction of concentrates

products on offer, an improvement in quality standards and

of copper and tin in the mines of Neves-Corvo. This is

an energetic effort to sell into foreign markets. The Alentejo

currently the most important mining project in the country

Region, where the most important marble and ornamental

and, given its location in the Alentejo Region, it implies that

granite quarries are located, is the major production centre in

this region occupies the top position in this subsector when

all of Portugal for ornamental stones. 26

aicep Portugal Global Portugal - Country Profile (May 2009) Industrial stones have risen in importance in recent years,

From the geographical standpoint, the strong asymmetries

reflecting heightened consumption of these raw materials

in the dispersion of industrial activities allow two regional

in the civil construction sector and in public works projects.

areas to stand out: Lisbon/Vale do Tejo and the North,

The North and Lisbon Regions are the most significant

which together accounted for three-fourths of employment

producers in terms of the value of production.

and GVA in the manufacturing industry in 2007.

The mineral and spring waters subsector of Portugal counts

In the Algarve, Centre and Lisbon capital intensive

on a significant hydro-mineral potential as evidenced by the

industries prevail while in the North labour intensive

large number of sources found throughout the country and

industries still carry a significant weight in the productive

by the vast hydro-chemical diversity that is attributable to the

structure due in large part to the importance of activities

complex and diversified geology of the country.

linked to the textile and shoe industries. The Alentejo has mostly manufacturing industries based on the use of

The North and Centre Regions hold about 74% of hydromineral resources and spring waters as a result of their geological-structural conditions.

Manufacturing Industry Since Portugal joined the EU, its manufacturing industry witnessed a considerable expansion both as to level of output and to value added, particularly from the period beginning in 1991.

However, even though there was a significant decline of the importance of the industrial sector’s contribution to the overall economy, this was not incompatible with changes, although slow, in the specialization of production that resulted in greater value added and the higher input of technology.

While the traditional sectors (textile, clothing, footwear, ceramics, ornamental stones, food and beverages) continue to maintain a significant importance in total manufacturing activity in Portugal, especially in so far as employment and exports are concerned, the industrial base has expanded

natural resources (food and beverages). In a like manner, the food and beverage industry account for differences in Madeira and the Azores.

Textile and clothing industry The textile and clothing industry is one of the most traditional in the entire Portuguese industrial structure and has always had a key role in the national economy. Despite the transformation witnessed by this sector (dislocation and factory shutdowns), it still remains one of the most important contributors to Portuguese manufacturing, being responsible for nearly 12% of national exports in 2008 (in the 1990s this ratio, on average, had been as high as 30%), 23% of employment, 9% of industrial output, and 8% of GVA [source: ATP – Associação Têxtil e Vestuário de Portugal (Portuguese Textile and Clothing Association)]. Here we are dealing with a mature sector which is fragmented and subject to constant changes between supply and demand. Its performance is strongly affected by fluctuations in global economic activity.

in those areas with greater technological content. A few

The sector is comprised of two industries which are

examples stand out such as the automotive sector and its

organized in terms of production lines: upstream is the

components, moulds, electrical and electronic machinery,

assembly part and includes the textile industry component

paper, and plastic materials. However, a few industries

that includes the production of fibres, spinning, weaving,

are losing their relative importance as to production and

knitting, and finishings (dyeing, printing and finishing);

employment such as heavy machinery, nonelectrical

and the downstream, which includes the clothing industry

machinery, transport equipment, and nonindustrial chemicals;

of which styling of articles of clothing and accessories is a

these are all sectors where Portugal is a large importer.

part. It is worth noting that not all output from the textile 27

aicep Portugal Global Portugal - Country Profile (May 2009) industry is destined for the clothing industry; there is a

In the list of the 50 best inventions for 2008 published by

component producing home textiles, and another part of

Time Magazine, in 26th place was a Portuguese bathing

production used as input by various industries (techical

suit, the LZR Racer manufactured by Petratex, that was

textiles and articles related to coverings).

used by Michael Phelps at the Beijing Olympic Games. Indeed, 94% of the swimming competitions at the Games

In the last few years, the activities of companies operating

were won by athletes using this type of swim suit!

in this sector have become more dynamic and competitive; they have pusued high levels of investment and introduced

Footwear industry

technological modernization and changed operating

The Portuguese footwear industry is currently experiencing

strategy by moving ahead and developing a culture atuned

a consolidation phase in preparation for facing new

to quality and innovation, rapid response, small series, and

challenges. After the adjustment to new realities regarding

control over distribution channels.

competition that involved the displacement of a few large production units with foreign capital, the footwear industry

From the territorial standpoint, this industry is dispersed

finds itself in a more stable situation. In the last few years,

throughout the country, although there are two important

the industry downsized, reformulated its business model

centres that are found in the North of Portugal (companies

and placed its wager on foreign markets, affirming a pro-

in the cotton sector) and in Beira Interior (woolen mills).

active business attitude.

They comprise 6,000 companies (textiles, excluding clothing) and about 11,000 clothing companies which

Comprised mainly of small and medium sized enterprises, this

together represent about 18% of total production units

industry survives on foreign demand (about 90% of production

in the national manufacturing indusrty and 2% of all

is destined for export), and even though it faces powerful

companies operating in Portugal.

competitors that benefit from very favorable production costs, it continues to produce a trade surplus and remains one of the

This sector represents today a more capital intensive profile,

main contributors to the country’s trade balance.

offers brand and design names, and is expanding more and more into new and demanding markets as, for example,

Within the manufacturing industry, it is also a major

Spain, the United States, and even the United Arab Emirates

employer. Recent data show that the 1,200 companies

and Saudi Arabia. One can point out a few examples of brand

that remain employ more than 35,000 workers, that is

names that have become well-known in international markets:

about 4% of total employment in manufacturing, and they

Lanidor, Dielmar, Ímpetus, Petit Patapon, Onara, Do Homem,

generate a volume of business totaling 1,340 million euros.

Vicri, and also how Portuguese companies really stand out

In 2008, Portugal exported more than 60 million pairs of

for their innovation: intelligent fabrics that are fireproof, anti-

shoes with an average price of about 20 euros per pair.

bacteria, or have therapeutic and moisturizing properties; cloth made up of a mixture of cotton, bamboo or recycled

The fundamental factors that differentiate Portuguese

polyester and cloth made of 100% wool used for suits that are

supply include the development of a value chain, with the

washable and known as the Shower Clean Suit made by Paulo

wager based the more demanding and valued segments

de Oliveira, an innovation obtained through special finishings

as well as on innovation and reliance on its own brands. In

that include anti-wrinkle, non-shrink, permanent-crease,

the last decade, the footwear industry attained significant

perspiration-resistant, and quick-dry features.

productivity gains: physical productivity in terms of pairs produced per number of workers increased 15% and the

The exterior and interior clothing worn by the astronauts of

gross value of output per worker rose 33%, reflecting

the European Space Agency (ESA) and International Space

rationalization of the production process, investments

are of Portuguese origin.

realized and the introduction of new production methods. 28

aicep Portugal Global Portugal - Country Profile (May 2009) Portuguese brands such as Fly London, Camport, Eject,

produced to any extent in two regions: Trás-os-Montes (more

Sofwaves, Luís Onofre, Paulo Brandão or Carlos Santos, with

than 90% of the total) and Madeira (4% of the total). In the

the last two directed towards the luxury segment, continue to

Azores, almost 80% of production corresponds to Vinho de

grow and become better known in international markets.

Mesa, followed by Vinho Regional with 12% of total wine production in the region.

In the leather segment of the footwear industry, which represents almost 80% of Portuguese footwear exports,

Good wines have always been produced in Portugal, as is

Portugal has a top position on both a European and world

the case with Barca Velha, Porta de Cavaleiros and Caves

scale: it occupied the seventh position in global terms in

São João, Tinto Velho of Rosado Fernandes, Aliança, Montes

2007 which corresponded to a 3.5% share.

Claros, Quinta das Cerejeiras, Collares, Quinta da Aguieira, Buçaco, Periquita, Pêra Manca and others, but in the last few

The wine industry Portugal possesses the oldest demarcation region in the world – the Douro region – and secular methods of

years the quality became broader with a range that is more varied by wines produced from national and international stocks. Therefore, it was fundamental to apply new wine

producing wines despite the modern technology that

making processes, adopt new technologies, have well-

predominates in Portuguese wine cellars.

prepared experts, and create new brands, all of which raised

There are 13 wine producing regions that exist in Portugal each

the profile of the quality of Portuguese wines, placing them in an outstanding spot at an international level.

with a typical culture that is apparent in every wine produced. Portugal’s entry into the European Union forced certain changes in the designation of wines produced. A Denomination of Origin was created which associated a wine with a determined region and three official designations were instituted: VQPRD which stands for Vinho de Qualidade Produzido em Região Determinada, Vinhos Regionais attributed to wines that possess a geographical indication and Vinhos de Mesa that are wines that are produced with selections or lots (a mixture of two

Proof of this can be found in the many prizes that have been awarded to Portuguese wines by prestigious publications and other international magazines linked to the wine industry whenever wine tastings take place abroad. Recently, five wine cellars fron the north of Portugal were featured by such American magazines as “Wine & Spirits” and “Wine Spectator” as being among the 100 best wines of the year. Aveleda, Niepoort, Quinta do Crasto, Quinta do Noval and Quinta do Vale Meão were the wine cellars that received “excellent” classifications.

or more stocks) of wines from various regions. They may have a geographical designation, since there can be no

Wood and cork industries

confusion with a VQPRD.

With few exceptions, the sub-sectors of wood, furniture and cork are strongly dominated by small and medium

In 2007, the regional structure of wine production in volume

sized industries.

presented well defined characteristics. The region of Ribatejo and Oeste produced about 70% of total table wines, the

The forestry sector accounts for 5.3% of national GVA,

same region associated with the Alentejo accounted for

12% of GDP and 12% of employment in manufacturing

82% of regional wines produced in Portugal in the same

industry and abot 10% of exports.

year. As for VQPRD the situation was as follows: the regions Entre Douro and Minho and Trás-os-Montes were responsible

The wood industry is essentially comprised of three areas:

for 55% of total production in this category, followed by

wood cutting, wood paneling and carpentry. According to

the Alentejo with 20% of the total. The VLQPRD was only

data from the Association of the wood and furniture sector, 29

aicep Portugal Global Portugal - Country Profile (May 2009) this subsector includes about 2,000 companies, 20,500

The paper and wood pulp industry

workers and a sales volume that surpasses 900 million

Consolidated into a reduced number of companies, this

euros annually. As for their distribution, wood cutting

industry is characterized by a high level of technology,

and companies specializing in producing wood panels are

strong productivity, and quality that is internationally

concentrated in the North and the Centre (90% of the

recognized. The exceptional planting conditions affecting

total), while carpentry firms are scattered throughout the

eucalyptus trees have resulted in Portugal’s pre-eminent

territory of Continental Portugal.

position as a producer of eucalyptus pulp in the EU.

Led by Portuguese and foreign economic groups that

In addition, there is in Portugal a well-established industrial

are of considerable size and scope on a European level,

network in the subsectors of paper, agglomerates

agglomerates and plywood, offer quality at a competitive

and furniture, with the possibility of exploring new

price, with specialization in fibre-based agglomerates,

opportunities to meet industrial needs and environmental

where Portugal accounts for more than 30% of installed

adjustments such as is the case with forest biomass.

capacity on the Iberian Peninsula. Worthy of note is the role played by Portucel Soporcel In the cork industry, Portugal is the world leader in the

in wood pulp and paper where it is among the largest

production and transformation of cork with more than

producers of of fine uncoated papers within Europe, UWF-

60% of total cork exports in the world. Portuguese cork

Uncoated Woodfree Paper, and is the largest European

exports (90% of output) account for 0.7% of GDP at market

producer – and one of the largest global producers – of a

prices, 33% of total national exports and about 30% of

special pulp named BEKP-Bleached Eucalyptus Kraft Pulp.

total forestry exports. Bottle corks alone account for 70%

This company also plays a key role in the energy industry

of the total exported. Portugal possesses a cork tree area

where it enjoys the status of being the largest producer

that corresponds to 33% of the global total (23% of the

in Portugal of biomass energy accounting for 55% of

national forest area) and produced on average in 2007 more

electrical energy generated from forest biomass.

than 50% of all global output (157,000 tons). The Alentejo accounts for 72% of all cork produced in Portugal. The

The “Navigator” paper produced by this group is one

manufacture of cork products is spread over 12 districts with

of the most widely sold premium office paper products

Aveiro and Setúbal providing most of the employment (58%

worldwide and the “Navigator Kids” and “Navigator Eco-

and 28%, respectively).

Logical” have won awards for several consecutive years.

The wood furniture industry is made up of more than

Chemical industry

2,500 companies, 34,000 workers and an annual sales

This industry is sufficiently diversified and specialized

volume of approximately 650 million euros. Production

and groups together a series of products that are rather

is dominated by small family-run firms that are focused

heterogenous, many of which not directly visible, but used

on the national market, although there are now some

in the manufacture of many goods that are consumerd

companies that have grown in size and produce mainly for

every day, including polyethylines, fertilizers, synthetic

export. The North region is the one that accounts for the

resins, plastic materials and artificial fibres. These materials

largest number of companies in this subsector (65% of the

constitute the point of departure for a series of chemical

total). The segment of the furniture industry that specializes

reactions, syntheses and transformations that give rise

in reproductions or in high style enjoys a good reputation

to new products that will be used by many of the major

abroad, although its share in total exports is still rather low.

industries operating in different sectors of activity. 30

aicep Portugal Global Portugal - Country Profile (May 2009)

Pharmaceutical and biotech industry

in contracting new Portuguese researchers to develop a

The pharmaceutical industry is one of the sectors that

research project exploring the increase of the half-life of

generates major employment for qualified workers, contributes

its pharmaceuticals, thus creating an additional source of

significantly to research and scientific knowledge and in the

exports of technology based services.

past few years has contributed significantly to Portugal’s economic development through an increase in exports of medical products which reached 300 million euros in 2007, most of which was generated by domestic companies.

Electrical and electronic industry This industry is centered mostly around the regions of Lisbon, Setúbal, Braga, and Oporto, with the largest companies being located in the North. It produces above

Its activity is largely concentrated in the Lisbon Region and more than half is dedicated to the production of specialty pharmaceuticals, conditioned by the system of price regulation affecting medicines. The remainder of the output is spread out among unspecified pharmaceutical products and the production of biological products.

Portuguese companies like Bial or Atral-Cipan, are synonymous with the development of new pharmaceutical solutions. Biotecnol, Alfama (which won the prize of best European startup in 2005), Crioestaminal, Medinfar/ Cytothera, Biocant, or IBET are engaged in finding solutions

all industrial machinery, equipment and appliances, cabling sets, lines and cables, telecommunications equipment, information, and professional electronic equipment, and electronic components.

It is a subsector that has an ever greater role in the development of the automotive industry. As a result, the consequences related to the reduction of production that can be seen in this sector at the European as well as global level, is already being felt in the Portuguese electrical and electronic components industry that produces for the automotive companies.

to conquer incurable diseases or to preserve stem cells for

Automotive industry

regenerative medicine.

The automotive industry has ramifications in all sectors of manufacturing, from metalworking to rubber, from

To cite just one example of the advances made in

electronics to textile, from glass to plastics.

pharmaceuticals in Portugal in the area of scientific research, in 2008 the European Molecular Biology

In Portugal, the development of the automotive industry

Organization (EMBO) granted funds to two Portuguese

in recent decades, has been strongly conditioned by the

researchers for their research concerning centrossoma, a

decisions related to industrial policy and the role of foreign

structure that regulates the multiplication of cells and is

investment, especially concerning the installation of local

frequently altered in cancer, and to expand the study of

assembly line production that became a focal point for the

molecular and cellular bases of neurodegenerative diseases

development of auto components.

such as Parkinson and Alzheimer. The productive structure of the auto sector did not develop Also, the Flemish biotechnology firm Ablynx, which recently

until the beginning of the 1970s, but has really grown in the

installed a research centre of excellence, one of the best

past few years. At the beginning of the 1980s with the arrival

centres in the world for phase display (technology that

of Renault, which besides assembling vehicles, produced

allows the perception of proteins – antibodies – in order

various parts such as motors, speedometers, and water pumps,

to obtain a certain effect and close to the Molecular and

and in the areas of foundry work and motor assembly, creating

Cellular Biology Institute in the city of Oporto, is interested

conditions for the existence of a horizontal industrial zone, that

31

aicep Portugal Global Portugal - Country Profile (May 2009) is competitive and of high quality, giving rise to development of

With the objective of helping local companies cope with

an auto components industry. The installation of Auto Europa

the crisis affecting the industry globally (with national

in 1994, contributed to relaunching the domestic market as

repercussions) due to a significant drop in demand, towards

well as gave a boost to domestic exports. The Auto Europa

the end of 2008, the Government launched a plan to

Project fit in perfectly with the desire to create an automotive

grant financial support measures to producers and makers

cluster, involving the establishment of joint ventures with

of automotive components that amounts to close to

existing companies and the start-up of new companies as

900 million euros. This plan rests on four stategic points:

suppliers of components and systems.

stimulate employment and retraining, provide financial support, modify the industrial and technological profile of

Portugal presents several strong points in this sector:

the sector, and grant incentives to stimulate demand for

existence of focal points of cooperation among companies,

cars – all decisive measures to guarantee employment and

universities and centres of research and development;

improve the competitiveness of the sector.

logistical solutions for markets outside the EU, particularly the North American market; a very adaptable labour force;

The moulds industry

the existence of certified companies; the existence of focal

The Portuguese moulds industry has grown over time

points and company clusters; and companies involved in

and gained a global importance. Growth has been driven

international supply networks. In addition, average hourly

by foreign demand, by the expertise and experience of

wage costs are competitive in the European context .

Portuguese mould producers, by the level of product

6

quality, delivery times, competitive prices, technological This industry today depends on a components sector that relies on a group of firms that is internationally competitive, well-place in the development of new factors

capability, and technical assistance, so that these companies have become major global suppliers of precision moulds, primarily for the plastics industry.

of competitiveness, especially in the areas of engineering, research and technological development. The components subsector contributed about 3% of GDP and 7% of the country’s exports, according to the Association of that sector, AFIA. In 2007 its membership include 180 to 200 firms with 40,000 workers (about 4% of total manufacturing industry employment) and generated a volume of business on the order of 4.8 billion euros.

The regional distribution of the components firms is not homogenous; it is concentrated in the coastal zone between

More and more, large multinationals (in the automotive industry, packaging, electronics and telecommunications, household appliances, etc.) choose domestic firms for the production of their moulds, which are subsequently destined to be used in the production of the best products of well-known international brands. Some examples include Samsonite, Nokia, Mercedes, and Porsche, which depend on the talent and engineering of Portuguese mould companies.

the Setúbal Peninsula and Viana do Castelo. The areas of Porto/Braga, Aveiro and Lisbon/Setúbal comprise three major industrial poles at a national level to which should be added the area near Leiria, where the production of injection moulds and plastic are a significant activity.

At the present time, the Portuguese moulds sector is made up of about 300 small and medium-sized firms that are capable of exporting, who are dedicated to the production of moulds and specialiized tools with excellence. They employ about 7,500 persons, and have a two-location

6 Data for 2006: 10.9€ in Portugal versus 21.5€ for the EU25 average in industry and services; 9.0€ in Portugal versus 22.9€ for the EU25 average in manufacturing

geographic distribution situated in Marinha Grande and in Oliveira de Azeméis. 32

aicep Portugal Global Portugal - Country Profile (May 2009)

7.3 Construction

Public services At the level of public services, the improvement in quality,

The construction sector plays an important role for adding

effort, accessibility, and availability of on-line public services

a dynamic element to the economy, with more than 30%

are examples worth highlighting in that they greatly

of the volume of business of the largest companies being done internationally.

facilitated the lives of citizens, favoured business activity, improved the availability and quality of services rendered, thus increasing the transparency of the administration and

Towards the end of the 1990s, this sector contributed about 10% of GDP and was one of the principal drivers of economic growth, with hallmark projects such as those

the development of industry and national services. Portugal finds itself in third and fourth places in the latest report on European Ranking of Public Services Online7

associated with Expo 98. Currently, it contributes around

concerning the availability of on-line public services and the

6% as there exists a perception by the principal players

sophistication of services offered.

of the sector, that there is a need to concentrate and to attain ever higher levels each time in the diversification of

The efficiency of the public administration in this area is

areas of activity, especially in the energy, environment and

due to the positive impact of the “Technological Plan” and

tourism sectors.

some of its key components, such as Simplex and Ligar Portugal, that have improved the quality of services offered

Projects related with the construction of a series of dams, where bids are about to be launched, and with the new airport for Lisbon and with the high speed railway lines, whose completion is foreseen for the end of the next decade, are all factors that will contribute towards helping the construction sector to experience a much higher rate of growth over the next few years.

to citizens and to companies. The advances registered in the creation of an environment favourable to business such as the “On the Spot Firm” (“Empresa na Hora”) were recognized for good practice by the European Commission and named “top reformer” by the World Bank. They were decisive factors in attracting the best technology companies in the world to invest in Portugal: Microsoft, Cisco, and Nokia-Siemens, and

7.4 Services The services sector, as previously mentioned, has been

contributed towards putting the country in second place among the European rankings and seventh on a global level in terms of electronic government8.

gaining greater importance in the Portuguese economy

The Simplex 2009 Program continues to bring together,

during the last few decades, being currently responsible

consolidate and develop important measures and gives

for about two-thirds of economic activity and 59%

particular attention to the simplification of procedures in

of all employment in Portugal, compared with 69%

the health sector, as well as a reduction in related costs for

in the EU27. Besides their economic pre-eminence,

small and medium sized industries.

services are one of the areas that registered some of the greatest technological advances, with many examples

7 A  ccording to the European Commission Report, Portugal’s performance improved

in telecommunications truly standing out such as the

125% as to availability between January 2005 and September 2007 (rising from 14th

fixed and mobile networks, Internet access, broadband,

from 13th place to fourth place).

etc.; the energy sector; financial sector services; and the information technology sector.

place to third place) and, over the same period, by 32% as to sophistication (rising

8 P ortugal passed from 48th to 7th place in the ranking of the Global e-Government Study, developed by Brown University in the United States, that examined 1,687 public sites of 198 countries.

33

aicep Portugal Global Portugal - Country Profile (May 2009) It contains 200 measures designed to reduce bureaucracy for

this will not only will lead to profound changes in this sector

the ordinary citizen and for companies, and thus contributing

but will also increase the competitiveness of the country.

to quality improvement and modernization of services in the public administration. One of the major components is designed to reduce administrative charges affecting Portuguese companies, as, for example, the creation of a “Via Verde” affecting projects of small and medium sized companies whose financing has been approved by the QREN - Quadro de Referência Estratégico Nacional (National Strategic Framework). Another example is the simplification of value added tax (VAT) reimbursements for companies that export that now is being approved automatically. Certain other measures take advantage of the Internet in order to simplify transactions between the Government and companies as is the case with the “Portal de Empresa 2.0,” as the only on-line contact point between companies and the public administration.

Energy

The increased capacity to produce domestic energy with recourse to developing renewable energies and the improvement in energy efficiency and reduction of CO2 already has produced some visible results. One of the largest photovoltaic plants9 in the world is located in Moura (Alentejo), the largest wind park10 in Europe is located in Monção (Viana do Castelo) and a pioneer project in area of wave technology11 on a global scale, not far from Póvoa do Varzim (near the city of Oporto), make Portugal a point of reference when it comes to renewable energy forms. According to REN – Rede Energética Nacional (National Energy Network), in 2008 wind power production rose 42% compared with the previous year, representing 11% of total consumption of energy provided by the national public network.

The promotion of renewable energy sources and energy efficiency aims to reduce carbon emissions and also reduce

In order to reduce the distance which still separates

Portugal’s energy dependence on foreign sources, on

Portugal from the European average in this area, the

combustible fossil fuels, on exposure to ever higher and

“Plan of Action for Energy Efficiency” was adopted which

volatile prices for petroleum and natural gas in international

includes various measures to encourage use of new

markets, and improve certain environmental conditions. All

technologies, improve organizational processes and to change the behaviour and sense of values that will lead to more sustainable consumption habits. The measures taken allow for a reduction in consumption equal to 10% up to 2015, thus exceeding the 8% goal established by the EU and will also mitigate by about 1% per annum the expected growth in the energy bill until 2015. 9 T he plant occupies an area of 250 hectares and is comprised of 262,080 photovoltaic modules. They have an installed capacity of 46 MW, it will produce 93 million kw/hour per year, the equivalent of energy consumed by 30,000 families, avoiding the emission of 86,000 tons per annum of CO2 into the atmosphere. 10 T his wind farm comprises 120 wind turbines and is capable of producing energy that is equivalent to the consumption of 300,000 households and allows the saving of 500,000 tons per year in CO2 emissions. 11 T he Aguçadoura Wave Farm, in its first phase will produce electricity using three Pelamis Wave Energy converters, a sort of marine snake that captures wave energy, installed about three miles from Póvoa de Varzim. The project will supply 15,000 families and avoid the emission of more than 60,000 tons per year of carbon dioxide. In the second phase of the project, another 25 machines will be produced and installed in order to increase capacity up to 21 MW.

34

aicep Portugal Global Portugal - Country Profile (May 2009) During the year 2009, there are plans to promote

that is higher than that of Western Europe, although this

extraordinary support measures for the installation of

has been revised downwards from 11.2% to 7.5%.

300,000 m of thermal solar panels for the residential 2

community, enabling adoption on the part of consumers

The companies in the technology and information field

while dynamizing a cluster of domestic industries providing

fulfill a fundamental role in the modernization of Portugal

photovoltaic panels that will have a positive impact on

and its many businesses in various sectors of the economy.

construction as these panels are installed. In addition, there will be provisions for extraordinary support for the installation of 12,500 microgeneration units, designated as mini wind generators, in the services sector, and so dynamizing the domestic industrial cluster sector that produces these technologies, with a beneficial effect on the metal-machinery, moulds and electrical equipment industries.

Until 2012 there are plans to invest more than 12 billion euros in the energy sector that applies to the construction of dams, combined cycle plants, wind farms, and related infrastructures that will permit yet another ambitious goal, the fifth objective within a European context, namely to allow Portugal to derive 60% of its electricity requirements from renewable sources by 2020.

Top on the list are those that introduced new technologies and new business processes that contributed to the improvement in business productivity and thereby the country as well. Many of them have achieved a leading position both domestically and internationally. We can cite the following examples: Critical Software is a key global reference in the software for critical information systems; SISCOG continues to gain the most demanding clients in the world; Number Five holds 75% of the global market in auto-identification; Altitude Software is the technological leader for call centres; and CRM, has won accolades such as “Member’s Choice Awards” from ContactCenterWorld. com, through secret and controlled voting by users of contact centre solutions around the world; Chipidea, recently acquired by the American company MIPS Technology of Silicon Valley, a deal that creates the second largest group in the world in semiconductor design, with

The last objective will be have 10% of fuels used by the automotive sector to be dervied from biofuels by the year 2010.

15% to 20% of global market share, and the foremost world provider of analog IP; ISA – Instrumentação e Sistemas de Automação, has widened the scope for the

According to statistics published by the European

application of its products (automatic management of fuel

Commission, Portugal is among the top five European

storage, secure supervision of free flowing of fuel from

countries in terms of energy efficiency, along with

storage areas, transport and planes; Novabase (leader in

Denmark, Germany, the Netherlands, and Ireland, as a

business solutions based on information technology), was

result of having implemented good practices, such as,

the firm chosen by the Ministry of Justice and by the AMA,

for example, the certificate of energy redemption, the

the Agency for Administrative Modernization (Agência

air quality found inside buildings, and the training of

para a Modernização Administrativa) to develop the service

professionals, all of which are aleady serving as examples

“Marca na Hora”, or One-Hour Trademark Service, a

for other European countries to emulate.

project that took a fundamental step forward in carrying out the “Programa Simplex;” HPS Portugal owned by INEGI

Information and Communications Technologies ( ICT)

ad by the German company HPS – High Performance Space

Despite the sharp decline in investment and spending in

Structure Systems, is developing technology (material for

information technology in various parts of the world as

thermal protection) for those vehicles that are expected to

forecast by IDC (International Data Corporation) for 2009,

be used in the next space mission by the European Space

Portugal will continue to maintain an annual rate of growth

Agency to the red planet in 2020. 35

aicep Portugal Global Portugal - Country Profile (May 2009) The scientific advances that occurred in 2008 in Portugal also were of equal importance. In the microelectronics field, there was the development of transparent integrated circuits to provide a support role in memory transistors instead of the traditional silicon, a product destined for various applications: screens, labels for intelligent packaging, identification chips, or medical applications in the area of biosensors.

Another discovery was that of a new material, designated as ionic gel, that will be used in developing batteries and combustible cells that will be both cheaper and environmentally friendly.

Geographically, the Lisbon metropolitan area continues to represent the largest concentration of services with about one-third of establishments. As for services rendered to businesses, the percentage rises by more than half, while the metropolitan area of Oporto hosts only 18% of the total.

Trade

In reality, Portugal’s trade has pretty much followed the same broad tendencies witnessed by the rest of Europe: patronage of supermarkets, hypermarkets, discount stores, widespread franchising, preference for shopping centres, and growth of electronic commerce.

The macreconomic indicators referring to both structure and trends in economic activity illustrate the importance of the services sector and of trade in particular within the scope of the overall economy; services account for 20% of domestic GVA, 38% of the volume of business and 22.6% of employment. As for the companies involved, the sector

This sector has deepened its knowledge of its clients, to appreciate service, improving factors such as proximity, convenience, quality and logistics; there has been an increase in brand development, in products that improve health and safety of clients, and the development of

comprises nearly 230,000 entities, that are concentrated in

deep discounting, medium-sized supermarkets and large

the regions of the Centre, North and Lisbon.

specialized areas.

Retail trade represents 60% of the total compared

In the last few years, Portugal witnessed a sharp increase

with 26% for wholesale trade, with the remaining

in areas given over to large retail businesses and shopping

14% accounted for by automotive commerce and fuel

centres. (Sonae Sierra is a European leader in the creation

distributors. As for distribution, the urban areas with the

and management of these consumer giants, with 50

highest concentration are Lisbon, Oporto, Aveiro, Braga,

shopping centres in Europe and Brazil, and recently won

and Setúbal, which together represent 70% and 58%

awards such as “Sustainable Energy Europe Awards” in

of retail and wholesale trade, respectively. Of note, the

the category “Market Transformation” which recognizes

food sector is a major component in both retail and

the company’s innovation in the area of sustainable

wholesale trade, accounting for 27% of the first and

energy through implementation of the “green centre”

47% of the latter.

concept in the development and management of its 36

aicep Portugal Global Portugal - Country Profile (May 2009) shopping centres.) Shopping centres have expanded in

8. Economic situation

size and can be found not only in major urban centres but also in medium-sized cities.

Financial services In the last few years the banking system, the insurance sector and capital markets in general experienced major changes. Today, Portugal’s banking sector is modern and

8.1 Recent economic policy During the decade of the 1990s, Portugal pursued an economic policy determined by the convergence criteria of the European Economic and Monetary Union (EMU) which resulted in Portugal’s admission to the euro area in January 1999.

encompasses commercial banking, investment banking,

At the end of a period of expansionary monetary policy

investment funds, and insurance companies. They operate

geared to the needs of the economy, there was an obligation

on similar standards as their counterparts in other European

to implement a more restrictive policy starting in 2002 in

countries as to profitability, solvency and cost structure.

order to reduce the public deficit. Among the measures adopted were an increase in the basic value added tax rate,

The global financial crisis that started in the mortgage market in the United States around the middle of 2007 and then appeared in the banking system with the

a reduction in public spending, the closing or restructuring of various public sector institutions, the phasing out of temporary work contracts in the public sector, and adoption of reforms primarily affecting the labour market.

bursting of the bubble in speculative real estate, with cascading losses in the financial sector, spread at an

In 2006, the Portuguese economy grew 1.3%, a much more

extraordinarily high speed to the entire international

favourable outcome compared with previous years. In general,

financial world. The rapid “contagion” to a large extent was due to the fact that it occurred in a sector that operates on a global basis and is stongly linked through networks involving loans and insurance risk covering those

the growth picture reflected the extremely positive results from exports of goods and services, with strong foreign demand contributing 1.0 percentage points (p.p.) to overall growth compared with declines in the prior two years (-1.3 p.p. and -0.5 p.p. in 2004 and 2005, respectively).

loans. That led to disequilibrium and instability and, in extreme circumstances, provoked the failure of important

For its share, the contribution of domestic demand to Gross

financial institutions and raised the need for Government

Domestic Product (GDP) growth was almost nil (0.3 p.p.), due

intervention to halt its spread.

to the weakening of consumer demand and the decline in public sector consumption. Although the decline in investment

Portugal too did not remain immune to this crisis. Even though it benefits from a modern and robust financial

was less than that of 2005, this indicator remained the most unfavourable element of economic performance.

system, there has been a need for public intervention in

Also noted was a deterioration in the foreign deficit reflecting

order to stabilize the system so as to avoid an even greater

the marked deterioration in the investment income category,

risk of insolvency and reduce the effects of a sharp halt to

and to a lesser extent, to transfers of capital.

credit availability.

On the positive side, it sould be worth noting that there was a reduction in the public sector deficit to 3.9% of GDP, a much

There are five major banks and they are Caixa Geral de

more favourable outcome compared with the 6.1% result of

Depósitos (part of the public sector) and the private banks:

the previous year and which exceeded the target established by

Millennium BCP, BES - Banco Espírito Santo, BPI - Banco

the Stability and Growth Program for the 2006-2010 period.

Português de Investimento, and Banco Santander Totta.

In 2007, Portuguese economic growth accelerated and 37

aicep Portugal Global Portugal - Country Profile (May 2009) its GDP increased by 1.9%, a rate that was still below the

essential conditions for creating an environment propitious to

average of the other countries that are part of the Euro Area,

investment and economic competitiveness.

but slightly higher, by one tenth of a point, than the target set by the Government in the state budget for that year. The

8.2 The economic outlook

good results registered in the fourth quarter of the year when GDP expanded by 2%, the best performance for the year,

Based on estimates available as of the end of the first quarter

contributed to the overall favourable yearly outcome.

of 2009, the performance of the Portuguese economy in 2008 was to a large extent conditioned by a particularly

Exports of goods and services continued to be the primary driver of economic growth, with significant increases

unfavourable external economic situation that began originally in the second half of 2007. The repercussions of the financial

noted both in sales of traditional goods as well as in sales to new markets. In addition, this was the first year that the technology balance was positive, an eloquent testimony

crisis that originated in the United States and spread to the rest of the world led to a cutback in financing, a highly uncertain economic climate and to global economic recession.

to the profound transformation that the Portuguese productive apparatus has experienced. This caused a change in the composition of exports, hitherto dominated

The unfavourable global environment caused a trend reversal in Portugal’s economic performance which had

by traditional products such as textiles and footwear.

been on an upswing since 2005, leading to a deceleration During 2007 it was confirmed that there was a recovery

in GDP growth in real terms (GDP was flat in 2008

in investment by companies, a fact consistent with the

compared with a growth of 1.9% in 2007), reflecting

improvement in the competitiveness and productivity of

a softening of net external demand that resulted in a

companies in general. This growth standard, sustained by

reduction in exports of goods and services (-0.5% in

exports and a recovery in investments reflected a progressive

volume) and a deceleration of domestic demand, with

improvement of economic fundamentals, which in turn was a

investment being most responsible for this decline (-1.% in

result of a development strategy that was based on improving

2008 after increasing 3.2% the previous year).

the qualifications of human capital, on technological modernization, on the reduction of administrative costs

In nominal terms, GDP reached 166,127.6 million euros in

especially by small and medium sized companies, and on

2008, reflecting an increase of 1.8% compared with the

the consolidation of public finances, all of which were

year before.

Main economic indicators (%) 2004

2005

2006

2007

2008a

2009b

2010c

Gross domestic productd

1.5

0.9

1.4

1.9

-0.0

-3.7

-0.8

Private consumption

2.5

2.0

1.9

1.6

1.6

-1.3

-0.4

Public consumptiond

2.6

3.2

-1.4

0.0

0.5

0.6

0.2

Gross fixed capital formationd

0.2

-0.9

-0.7

3.2

-1.1

-14.4

-8.0

Exports of goods and servicesd

4.0

2.0

8.7

7.5

-0.5

-11.7

-0.1

Imports of goods and services d

6.7

3.5

5.1

5.6

2.1

-10.0

-2.3

Current balance (% of GDP)

-7.6

-9.5

-10.1

-9.5

-11.9

-9.8

-9.5

d

Public sector balance (% of GDP)

-3.4

-6.1

-3.9

-2.6

-2.6

-6.5

-6.7

Public debt (% of GDP)

58.3

63.6

64.7

63.6

66.4

75.4

81.5

Unemployment rate

6.7

7.6

7.7

8.0

7.7

9.1

9.8

Inflation rate

2.5

2.1

3.0

2.5

2.7

-0.3

1.7

e

Sources: 2  004/2008 INE - Instituto Nacional de Estatística , Banco de Portugal and European Commission; 2009/2010 Banco de Portugal, MFAP and European Commission (a) Preliminary data;

(b) Forecasts;

(c) Projections;

(d) Change in real terms;

(e) Harmonised Index of Consumer Prices

38

aicep Portugal Global Portugal - Country Profile (May 2009) The labour market was characterized by some employment

economy, will affect private consumption growth (-1.3%). As

growth in the first half of the year which brought about a

for public consumption, it is expected that there will be negative

decline in the unemployment rate to 7.4% but economic

growth here due to certain reductions in public spending.

conditions worsened in the second half and brought up the jobless rate to an average for the full year 2008 of 7.7%.

The unfavourable external picture should also affect trends in investment outlays. Only in 2010 are they expected to feel

By sectoral breakdown, the services sector contributed to

the positive impact from the start of definite plans that involve

changes registered in the labour market. This indicates a

private sector participation in the development of important

significant mobility of workers and strong dynamism in the

projects in the public works area, the highlights of which include

sector. Contrary to that, the secondary and primary sectors

the energy, tourism, railway, and highway construction sectors.

experienced reduction and stagnation, respectively, indicating a transfer of manpower to service-related industries.

The above developments are likely to lead to an increase in the merchandise trade deficit, which will be only partially

The increase in prices of raw materials, especially for crude

offset by the services component.

petroleum, and the appreciation of the euro in relation to the dollar contributed to an acceleration in consumer

The rate of inflation, which in 2006 saw the trend shift

prices, with inflation as measured by the average change

away from reductions that had been in evidence since 2001,

in the purchasing power index reaching 2.7% in 2008, up

rose to 3.0% that year, a rise attributable to the impact on

three tenths compared with the year before.

consumer prices from the rise in indirect taxes, as well as an increase in prices of imported goods, fell to 2.5% in 2007.

Due to the adverse economic conditions prevailing, the Banco

In 2008, the acceleration of international prices for energy

de Portugal forecast for 2009 calls for a contraction of -3.5%

products made inflation turn around and record a slight

of the GDP (the European Commission forecast is -3.7%),

increase from the previous year.

compared to the previous year when growth had been flat. The negative prospect relects weakness in domestic demand.

For 2009 a significant decline in the rate of inflation is

The greater difficulty in obtaining access to credit associated

anticipated, based on the assumption that raw material

to the high level of indebtedness by individuals and the high

prices, especially for energy products, will decline and that

degree of uncertainty related to the development of the

domestic demand will register another decline.

GDP growth rates (%)

2005

2006

Portugal 1

2007

Inflation rates

2008a

Euro Area 2

2009b

2010c

EU27 2

Source: (1) INE – Instituto Nacional de Estatística (2005-2008), European Commission (2009-2010) (2) European Commission – Economic Forecast, Spring 2009 Note: (a) Preliminary estimatess; (b) Forecasts; (c) Projections

2005

2006

Portugal 1

2007

2008a

Euro Area 2

2009b

2010c

EU27 2

Sources: (1) INE – Instituto Nacional de Estatística (2005-2008), European Commission (2009-2010) (2) European Commission – Economic Forecast, Spring 2009 Notes: (a) Preliminary data; (b) Forecasts; (c) Projections; Inflation rate – Harmonized index of consumer prices

39

aicep Portugal Global Portugal - Country Profile (May 2009) Regarding public finances, the process of budgetary consolidation that began in 2005, resulted in a correction of a significant portion of the existing budgetary disequilibrium due to the adoption of a restrictive budgetary policy and implementation of structural reforms that resulted in an increase in revenues (higher fiscal receipts) and the reduction of expenditures (primary and capital spending). This coupling of efforts resulted in a budget deficit in both 2007 and 2008 that fell to 2.6%, the lowest ratio in the last 30 years.

Even the level of public debt saw some improvement; its decline was more than had been foreseen and in 2007 there was a decline of the debt-to-GDP ratio. In 2006, the increase in GDP was accompanied by a slight increase in the employment level, particularly in the private sector, so that the unemployment rate in Portugal remained more or less stable, but in the following year the trend changed with a consequent rise once again in the unemplyment rate to a level of 8%. In 2008 due to more dynamisn in the labour market, the unemployment rate declined again to 7.7%, and so fallin back to levels that prevailed in 2005 and 2006, that although they were high, were foreseen to be on a new stabilization trend.

Unemployment rate (%)

With a diffcult year foreseen in 2009, the improved balance in public accounts finds Portugal better prepared to deal with the adverse consequences of the financial situation and the economic outlook, with the euro area set to register the worst decline in GDP since the introduction of the European common currency with some countries experiencing a contraction in their economies, including 2005

2006

2007

Portugal 1

2008a

2009b

Euro Area 2

2010c

EU27 2

Germany, France, Italy, and Spain, all of which are Portugal’s main export markets.

Source: (1) INE – Instituto Nacional de Estatística (2005-2007; European Commission (2008-2010) (2) European Commission – Economic Forecast, Spring 2009 Note: (a) Preliminary data;

(b) Forecasts;

(c) Projections

Despite serious constraints on the economic ront, Portugal succeeded in consolidating a few structural changes in its 40

aicep Portugal Global Portugal - Country Profile (May 2009)

8.3 The regional economies In 2007 the value of regional GDP in nominal terms grew less than the national average of 4.9% only in Lisbon (4.6%), the Algarve (4.6%) in the A.R. of Madeira (4.7%), and in the A.R. of the Azores (4.5%), with the remaining regions growing above the national average, also in nominal terms, most notably the Centre Region (5.3%).

As for the geographical breakdown of GVA and employment, the region of Lisbon stands out, accounting for the largest share in terms of GVA (36.6% of the national total), and the North Region, in so far as it accounts for the largest share of employment (34.3% of the total).

In both 2006 and 2007, only the Lisbon Region exceeded the European average in terms of per capita GDP expressed in terms of PPP12 (106% of the EU 27 average, while the national average stood at 76%).

In 2006, the latest available data, gross fixed capital formation (GFCF) for the country as a whole, expanded 2.0% in nominal terms over 2005, with the regions of Lisbon, the Algarve and the North making above-average, positive contributions of 15.3%, 10.7%, and 4.2%, respectively. economy: the weight of services has increased its share in in total exports and the geographical diversification of exports was enhanced (the four major markets saw their share of the total decline 2.5% compared with 2007), in counterpoint with a decline in the importance of the EU as a trading partner of Portugal.

With the objective of attenuating the effects provoked by the international crisis on the economy, the Portuguese Government launched a package of measures to stimulate the economy, assist families and businesses – the main victims of the of the crisis, and to encourage investment and protect employment. It also implemented measures to

In the remaining regions, investments made were below the 2005 level, due to declines registered in the categories relating to trade, hotel, restaurant, transport, and communications, except for the Centre Region that was most adversely affected by the reduction in investments related to financial activities, real estate, rentals, and business services.

Also in 2006, gross disposable family income expanded 4.2% in nominal terms compared with the previous year, while at the regional level this indicator grew at different rates, with families in the Algarve region experiencing disposable income growth well above the national average.

strengthen financial stability, a vital area needed to restart the economy.

12 PPP – Purchasing power parities

41

aicep Portugal Global Portugal - Country Profile (May 2009)

North

1.9%. As for investments, the North was in second place

The North is one of the oldest regions of Portugal but is the

with a 28% share, having risen in nominal terms for the

one that has the youngest population of the Continent (39%

last three years. The labour force participation rate is equal

of the total). In this region can be found the second largest

to the national average, but the region also has the highest

Portuguese city, Oporto, which contributes in a major way to

unemployment rate in the country, accounting for 41% of

the important position the region has relative to the national

the total, a not so positive factor that can be explained by the

GDP (second position with 28.1% of the total in 2007). Also

industrial characteristics of this region. Meanwhile it keeps

in 2007, the North recorded the highest growth rate in GDP

up a significant export activity, accounting for 41% of all

in real terms: 2.4% compared with the national average of

Portuguese exports, mostly industrial products.

Capital:

Oporto

Area:

21,286 km2 (23.9% of the Continent) 3,745,236

Population (2007):

©Antonio Sacchetti

General Data

Sub-regions:

Alto Trás-os Montes, Ave, Cavado, Douro, Entre Douro e Vouga, Grande Porto, Minho-Lima, and Tâmega

Councils:

86 (27% of the national total)

Geomorphologic characteristics

Plains along the coast; hills and mountains in the interior.

Major rivers

Minho and Douro.

Flora

Pines, including the maritime type on the coast; Eucalyptus, which is replacing oaks. Douro river (Oporto city)

Agricultural sector (major economic activities)

Wheat, maize, vegetables and vines (first region of demarcation in the world - Douro), with Port wine that is unique. Cattle grazing and fishing.

Industrial sector (principal industries)

Electric and electronic equipment, automotive components, shipbuilding, textiles, footwear, furniture, cutlery and ironworks, wood and cork, dairy products; mining.

Nº of exporting companies (2007)

8,972 (36.7% of the total)

Infrastructure

Oporto International Airport; good roadway connections (auto-estradas, IP and IC); Oporto subway/underground system

Main Economic Indicators 2003

2004

2005

2006

2007

39,056

40,415

41,799

43,511

45,780

10.6

10.9

11.2

11.6

12.2

Gross value added (GVA) (a)

33,950

35,139

35,980

37,244

39,240

Gross fixed capital formation (GFCF) (a)

8,245

8,447

9,041

9,424

n.a.

Gross disposable family income (a)

28,268

29,445

30,402

31,734

n.a.

Employment (c)

1,762.6

1,761.4

1,752.4

1,758.6

1,756.1

Gross domestic product (a) GDP per capita (b)

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b)Thousands of euros;

(c) Thousands of persons;

n.a. - not available

42

aicep Portugal Global Portugal - Country Profile (May 2009)

Centre

is over 15 years of age. The latter group is employed

The Centre Region, although it is not a major contributor

mostly in manufacturing and services. The region also was

to national GDP (19% in 2007), has an activity rate (58%)

responsible for almost 22% of the country’s exports in

that is above the national average (53%), despite being

2007. This region, due to the diversity of its countryside

the second region of the country in terms of having the

and its beautiful architectural sites, has seen a major

highest population of persons aged 65 and over. The

expansion in tourism activity in the last few years, as can

employed population corresponds to over half (54%)

be seen fro the number of hotel nights spent in the area

of the resident population and 57 % of the population

which exceeded three million in 2007.

©Antonio Sacchetti

General Data Principal cities:

Coimbra and Aveiro

Area:

28,200 km2 (31.7% of the Continent)

Population (2007):

2,385,911

Sub-regions:

Baixo Mondego, Baixo Vouga, Beira Interior Norte, Beira Interior Sul, Cova da Beira, Dão-Lafões; Médio Tejo, Oeste, Pinhal Interior Norte, Pinhal Interior Sul, Pinhal Litoral, Serra da Estrela

Councils:

100 (25,2% do total)

Geomorphologic characteristics

Relatively flat terrain near the coasts; Rocky terrain in the interior (shale, granite, wolfram).

Flora

It is one of the richest areas in forests, especially olive trees.

Piodão Village (partial view)

Predominant countryside

Diversified countryside with contrasts between beaches on the coast and mountains; rich in architectural landmarks

Industrial sector (principal industries)

Chemical industry, automotive components, moulds, pulp and paper, textiles (wool), ceramics, dairy products, olive and meat processing, winemaking; mining (gold, lead, wolfram, and tin).

Nº of exporting companies (2007)

5,236 (21.4% of the total)

Main Economic Indicators 2003

2004

2005

2006

2007

26,635

27,717

28,417

29,652

31,229

11.3

11.7

11.9

12.4

13.1

Gross value added (a)

23,153

24,099

24,461

25,381

26,768

Gross fixed capital formation (a)

6,601

6,880

7,089

6,942

n.a.

Gross disposable family income (a)

19,815

20,513

21,192

22,150

n.a.

Employment (c)

1,245.1

1,233.3

1,221.5

1,235.7

1,229.7

Gross domestic product (a) GDP per capita (b)

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

43

aicep Portugal Global Portugal - Country Profile (May 2009)

Lisbon

accounted for more than one-fourth of employment (27%),

The Region of Lisbon is made up of Greater Lisbon and by

and for 37% of the country’s GVA. It is also the a region

the Península of Setúbal. Given the economic importance

that generates a lot of exports, being responsible for nearly

of the Greater Lisbon sub-region in the overall economy,

30% of Portugal’s total exports in 2007. Despite being the

this region is the most important contributor to national

second region in terms of number of exporting companies

GDP, in productivity, in investment, and in gross disposable

(surpassed only by the North), the most qualified labour

family income. Also, in terms of GDP per capita, Greater

force and the largest number of high technology

Lisbon is above the national average by 70% and in 2007

companies can be found here.

Capital:

Lisbon

Area:

2,935 km2 (3.3% of the Continent)

Population (2007):

2,808,414

Sub-regions:

Greater Lisbon and Península of Setúbal

Councils:

18 (5.8% of the national total)

Countryside:

There are beaches and many green areas.

Major rivers

Tagus and Sado

©José Manuel

General Data

Praça do Comércio and Terreiro do Paço squares – Arch of Augusta St.

Agricultural sector (predominant agricultural activities)

Has much fertile land in areas near rivers. Principal crops: cereals, fruit, vines,a and horticultural products.

Industrial sector (principal industries):

This region groups together many large and medium-sized companies in manufacturing. For example: petrochemical, shipbuilding, steel-making, automotive industry, textiles, salt extraction, stone quarrying, fishing, and wine-related activities.

Nº of exporting companies (2007)

8,446 (34.6% of the total)a

Services:

In this region are concentrated most of the service activities, with the tourism sector being a major industry.

Main Economic Indicators 2003

2004

2005

2006

2007

50,891

53,208

55,140

57,087

59,722

18.7

19.3

19.9

20.5

21.3

Gross value added (a)

44,238

46,261

47,463

48,864

51,190

Gross fixed capital formation (a)

10,333

9,859

9,731

11,218

n.a.

Disposable family income (a)

31,799

33,037

34,657

35,827

n.a.

Employment (c)

1,365.2

1,366.3

1,369.7

1,370.5

1,376.5

Gross domestic product (a) GDP per capita (b)

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

44

aicep Portugal Global Portugal - Country Profile (May 2009)

Alentejo

that is closer to the national average and has produced gains that are above average in terms of productivity.

The Alentejo Region is characterized by great distances

The multifaceted project of the Alqueva has added a great

between localities; it is sparsely populated despite having

deal of dynamism to the interior area of the Alentejo. Various

experienced large numbers of emigration and migrations.

infrastructures of the Alqueva Global System have already been

The economic profile of this region has been changing in

built and many other are well advanced. Today, the Alqueva is

the past few years as a result of two large projects with

about to become one of the finest tourist destinations.

enormous implications for the economic structure of the

The logistics platform of Sines and its port (the country’s

Alentejo: in the interior the Alqueva and along the coast

leader in the quantity of merchandise moved) have

the industrial zone and port of Sines. Because of these

assumed a fundamental role in the economic and

changes the region is experiencing per capita GDP growth

entrepreneurial fabric of the region.

Principal cities:

Évora and Beja

Area:

31,552 km² (35.5% of the Continent)

Population (2007):

760,933

Sub-regions:

Alentejo Central, Alentejo Litoral, Alto Alentejo, Baixo Alentejo, and Lezíria do Tejo

Councils:

58 (18.8% of the national total)

Geomorphologic characteristics

There are plains, except in the north and east which is characterized by mountain areas of low altitude. (Serras of São Mamede and of the Marão).

Climate

Hot and dry (different from the rest of the Portuguese territory), due to low precipitation.

©EDIA,S.A.

General Data

Alqueva Dam

Flora

Above all olive trees, cork trees, red oaks, and pines.

Mining

Copper, sulphur, marble, and pyrite.

Agricultural sector (major agricultural activities)

Wheat, barley, oats, and sunflowers; raising of pigs, sheep, and horses.

Industrial sector (principal industries)

Petrochemical industry, automotive and electronic components, marble industry, winemaking, olive and meat processing.

Nº of exporting companies (2007)

1,155 (4.7% of the total)

Major projects at the regional level

Alqueva Dam - largest dam in Portugal and in Europe, situated on the Guadiana River, in the interior part of the Alentejo, close to the Spanish frontier. Port of Sines – logistics platform for ports and industries, international logistics for services and energy.

Main Economic Indicators 2003

2004

2005

2006

2007

Gross domestic product (a)

9,388

9,728

10,051

10,670

11,192

GDP per capita (b)

12.2

12.7

13.1

13.9

14.7

Gross value added (a)

8,161

8,458

8,652

9,133

9,594

Gross fixed capital formation (a)

2,703

3,256

2,817

2,385

n.a.

Gross disposable family income (a)

6,627

6,865

6,961

7,312

n.a.

Employment (b)

317.9

316.8

317.5

318.9

319.7

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

45

aicep Portugal Global Portugal - Country Profile (May 2009)

Algarve

This region, which every year receives almost 10 million

The Algarve is the southernmost region of the mainland

visitors, accounted for more than 35% of the number of

of Portugal and is known as one of the principal tourist

all rated hotels, about 41% (10.7 million) of registered

destinations in Portugal, offering many diversified and quality

nights spent in hotels and received an impressive one-third

attractions. As a result, the services sector, which absorbs 63%

of the all the income generated by hotels. The importance

of the employed population, dominates economic activity in

of this subsector allowed the region to register per capita

the region, with tourism being the primary “motor” driving

GDP growth and productivity advances that exceeded the

economic development in the Algarve.

national average.

Capital:

Faro

Area:

4,996 km² (5.6% of the Continent)

Population (2007):

426,386

Cities (16):

Albufeira, Alcoutim, Aljezur, Castro Marim, Faro, Lagoa, Lagos, Loulé, Monchique, Olhão, Portimão, S. Brás de Alportel, Silves, Tavira, Vila do Bispo, and Vila Real de Santo António.

Geomorphologic characteristics

Plains along the coast; higher elevations in the interior. The highest point is in the Serra de Monchique.

Main rivers

Guadiana, on the frontier with Spain.

©José Manuel

General Data

Lagos beach

Flora

Characterized by almond trees, prickly cactus, thistle flowers, lavender, red oaks, cork trees, olive trees, and carob shrubs.

Agricultural sector (main agricultural activities)

Maize and wheat. Traditional agricultural products of note are dried fruits (figs, almonds and carob beans), berry brandy and cork. Donkey raising prevails in grazing.

Industrial sector (principal industries)

Fish farming, forestry (cork and carob bean), marble works, pottery, copper and wood, food products (biological products), fishing industry (canning).

Nº of exporting companies (2007)

381

Services:

Tourism. The region has beautiful beaches and natural scenery.

Main Economic Indicators 2003

2004

2005

2006

2007

Gross domestic product (a)

5,669

5,852

6,169

6,540

6,842

GDP per capita (b)

14.1

14.3

14.9

15.6

16.1

Gross value added (a)

4,928

5,088

5,311

5,598

5,865

Gross fixed capital formation (a)

1,617

1,609

1,642

1,817

n.a.

Gross disposable family income (a)

4,064

4,169

4,347

4,594

n.a.

Employment (b)

202.0

206.8

207.6

208.7

209.0

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

46

aicep Portugal Global Portugal - Country Profile (May 2009)

Azores

rate rose from 37.4% to nearly 40% and total profits went up

The Autonomous Region of the Azores is considered the

45.8%, reaching a level of 55 million euros by 2007.

western frontier of the European Union. It is an archipelago

The gross domestic product of the Azores reached three billion

full of so much natural beauty as to make it a logical choice

euros in 2007, due to a nominal increase of 4.5% from the

for tourism development, a sector considered of strategic

previous year and a rise of nearly 47% compared with 2000.

importance in the region’s development. In the years from 2003

The excellent performance of the regional economy in the last

to 2007, the number of hotel nights rose 47.3% to almost

few years made it possible for the Azores to surpass the regions

1.2 million at the end of the period, the average occupancy

of North and Centre in terms of per capita GDP in 2007.

Capital

Ponta Delgada

Other major cities:

Horta and Angra do Heroísmo

Area:

2,322 km2

Population (2007):

244,006

Composição do arquipélago

Nine islands and some uninhabited islets (the Formigas). Islands of the eastern group: Sta. Maria and S. Miguel. Central Group: Terceira, Graciosa, S. Jorge, Pico, and Faial. Western group: Flores and Corvo.

©Associação de Turismo dos Açores

General Data

The Pico island

Geomorphologic characteristics

Volcanic origin, except Sta. Maria. There are still active volcanoes on the island of S. Miguel.

Flora

There are 56 indigenous species; the typical local vegetation of the Azores is one of the most interesting in Europe. The most important are cedar, holly, the ericaceous tree, heather, and heath, etc.

Fauna

Migratory birds, the São Miguel bulldog and various types of fish of interest to sports fishermen.

Agriculture and fishing sectors (principal activities)

Maize, sweet potato, wheat, and yams. Cattle raising. Fishing activity (especially tuna) and the traditional whale hunt.

Industrial sector (principal industries)

Besides industries linked to agriculture (dairy products and similar) and fishing, there is some light manufacturing.

Nº of exporting companies (2007)

99

Services

Tourism

Main Economic indicators 2003

2004

2005

2006

2007

Gross domestic product (a)

2,785

2,887

3,018

3,199

3,343

GDP per capita (b)

11.6

12.0

12.5

13.2

13.7

Gross value added (a)

2,421

2,510

2,597

2,738

2,866

Gross fixed capital formation (a)

1,167

1,027

1,290

871

n.a.

Gross disposable family income (a)

2,085

2,153

2,250

2,348

n.a.

Employment (b)

100.8

103.2

104.2

104.5

104.8

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

47

aicep Portugal Global Portugal - Country Profile (May 2009)

Madeira

such as milling, bread and pastry, dairy products, beer,

The economy of the Autonomous Region of Madeira is

tobacco, and wine.

based mostly on the services sector, with tourism being the

In the last few years, there has been a rapid build-up of

most important source of revenue. The primary agricultural

infrastructures, particularly to enhance accessibility, as well

crops are bananas for local and national consumption,

as more schools and health facilities, in order to improve

flowers and the well known Madeira wine. In the industrial

living conditions of the population and businesses so they

sector, which accounts for 10% of regional GDP, there

can participate more actively in the Region’s development. It

coexist handicrafts activities aimed at the export market

is worth noting that the dynamic conditions in the area have

such as embroideries, tapestries and wicker baskets,

resulted in job creation for the local active population, given

together with others oriented towards the regional market

that the unemployment rate was only 6.7% as of 2007.

©Paulo Magalhães

General Data Capital:

Funchal

Area:

801 km2

Population (2007 estimates):

246,689

Geographical situation

Archipelago in the Atlantic Ocean at 978 km southwest of Lisbon and about 700 km from the African coast.

Composition of the archipelago

Island of Madeira, island of Porto Santo, Ilhas Desertas and Ilhas Selvagens. The last two are not inhabited but are natural reserves.

Geomorphologic characteristics

Volcanic origin. View of the city of Funchal

Flora

The indigenous forest of Madeira, the Laurissilva, is a treasured patrimony for being one of the rarest forests on the planet. There are other plants and trees and flowers (orchids).

Agricultural sector (principal activities)

In the lowlands, close to the sea: banana, custard fruit, mango, sugar cane, and maracujá. At moderate elevations: potato, beans, wheat, maize, and Mediterranean fruit trees (fig trees, medlar trees). In higher elevations: pasture lands, pines and woods. As for grazing, there are sheep and goats and a few cattle. There are some traditional forms of fishing in catching tuna and swordfish.

Industrial sector (principal industries)

Handicrafts activities: embroidery, tapestry and wicker items. Small industries focused on local markets: pastas, dairy products, sugar cane.

Nº of exporting companies (2007)

141

Services

Tourism

Main Economic Indicators 2003 Gross domestic product (a)

2004

2005

2006

2007

3,887

4,156

4,348

4,609

4,824

16.1

17.1

17.8

18.8

19.6

Gross value added (a)

3,379

3,613

3,743

3,945

4,135

Gross fixed capital formation (a)

1,064

1,496

1,480

1,090

n.a.

Gross disposable family income (a)

2,299

2,446

2,491

2,588

n.a.

Employment (c)

119.0

123.9

122.1

124.2

123.7

GDP per capita (b)

Source: INE – Instituto Nacional de Estatística – Definitive Regional Accounts for 2006 and Preliminary 2007 Notes: (a) Millions of euros;

(b) Thousands of euros;

(c) Thousands of persons;

n.a. - not available

48

aicep Portugal Global Portugal - Country Profile (May 2009)

9. Regional Economic Framework – Portugal and the European Union

such as Brazil, Angola and Mozambique where there is a significant Portuguese presence.

Portugal’s external relations policy will continue to be based

The course of Portugal’s European journey, first as a

on maintaining strong relations with the North Atlantic

member of EFTA between 1960 and 1985, then with the European Community beginning in 1986, had an impact on its economic development. The EFTA effect had an impact

countries, mainly the United States, due primarily to its NATO presence, as well as promoting closer economic relations with the key emerging markets such as Russia,

in generating more trade between Portugal and the other

China and India.

member countries, the EEC effect introduced new elements with major consequences at an economic level, such as the introduction of the “single market”, trade liberalization,

Within the European Union, Portugal can be considered as a medium-sized economy that has made all the necessary

customs and monetary union, and even an opening up

efforts to achieve economic convergence with the EU.

towards Spain which became in just a few years Portugal’s

Nevertheless, the international crisis that was unleashed

principal trading partner.

already in 2007 and affected all countries, led to the change in defined goals and a postponement of any further closer

Portugal also has strong cultural ties with the countries

integration with the rest of the European Community.

that comprise the Portuguese Speaking Language Community (Comunidade de Língua Portuguesa – CPLP)

In order to have a global overview of Portugal’s position in

and has been trying to transform these ties into greater

the last two years, in context of the EU and the euro area,

political and economic cooperation with the various

below is a comparative table of key economic indicators,

member countries, especially with the larger countries

published by the Economist Intelligence Unit.

Selected Economic Indicators for the European Union

2007

2008

GDP (% change)

Portugal

2007

2008

Unemployment (%)

Euro Area

2007

2008

Inflation (%)

EU15

2007

2008

Export of Goods & Services(% change) EU (New 12)

2007

2008

Imports of Goods & Services (% change)

2007

2008

Current Account Balance (%PIB)

EU27

Source: EIU Viewswire – 5 Year Forecast Table Notes: Year 2007 – Final data for Portugal and estimates for the other groups; Year 2008 – Estimates; exports and imports of goods and services include intra-regional trade; EU12 includes Bulgaria, Cyprus, Estonia, Slovakia, Slovenia, Hungary, Latvia, Lithuania, Malta, Poland, Czech Republic and Romania. Data for Malta are not included.

49

aicep Portugal Global Portugal - Country Profile (May 2009) Portugal has a per capita GDP that is nearly double the

10. Foreign Trade

average of the 12 enlargement countries, but only about Within the context of a sharp decline in global demand,

half that of the euro area and the EU15.

the preliminary estimates of the World Trade Organization As for the remaining indicators, as can be seen from the

point to a 2% growth in international trade in 2008, versus

above table, they all registered declines in 2008. The

an increase of 5.5% in 2007, with prospects of a worst

growth rate of the Portuguese economy has been quite

performance in 2009 when the decline is expected to be

penalized by the international crisis and has deviated from the European average, the unemployment rate is aligned with the euro area average and is only slightly higher than

9% in volume, and particularly linked to a sharp decline in developed countries (-10%) while the exports of emerging market countries may not increase more than 2/3%.

the EU average. Expected inflation shows a much lower

In 2007, Portugal registered a nominal increase of 11% in

rate than the average for the EU and the euro area. The

exports of goods and services, the second best showing for

new members of the EU are showing inflation that is three

the 2004-2008 period and had a gain in market share on a

times higher than that of Portugal.

global basis. In 2008, there was an increase of only 2.4%, with the last quarter alone showing a 8.9% decline, the worst for the year.

GDP per capita

Portugal’s foreign trade was especially impacted by the effect of the international crisis on its principal trading partners, particularly those countries that are other members of the EU, where there was a negative growth rate of 2.8%, the first decline since 1993. All together it is important to point out that Portuguese exports of goods and services, especially the latter, had Portugal

Euro Area

EU15

2007

EU (New 12)

EU27

2008

Source: EIU Viewswire – 5 Year Forecast Table Notes: Per capita GDP at current prices.

shown exceptional strength, without parallel, in the last few years even with a strong euro and the loss of competitiveness of some of our most important industries, becoming one of the factors that most contributed to the good performance of the Portuguese economy (206% and

Concerning the forecasts relating to growth of goods and services, even considering that they include intra-community trade, it is important to single out the negative impact of the international crisis on foreign trade at a global level, affecting the European market and Portugal in particular.

Lastly, the least positive component of this group of

135% in 2006 and 2007 to overall growth in GDP). The importance of merchandise exports in the economy has also increased, and in 2008 accounted for 34% of GDP compared with only 26.8% in 1995.

10.1 Trade balance trends

indicators is the deficit in the current account balance, where Portugal continues to show a much larger

The Portuguese trade balance of goods and services is

disequilibrium on average compared with the other

traditionally in deficit and in 2008 it showed a negative

members of the EU.

outturn that approached 17 billion euros. In the last five 50

aicep Portugal Global Portugal - Country Profile (May 2009) years, the sales of goods and services to the rest of the

Over the same period, foreign trade in merchandise

world registered an average annual growth rate of 7.7%.

registered an average annual growth rate of 6% in

In annual terms, the largest change occurred in 2006

exports and 7% in imports in nominal terms, although

when there was an increase of 14%. As for purchases

there was a very sharp decline in the rate of growth of

from abroad, the average annual growth rate over the

our sales abroad in the last two years, which followed

same period was slightly lower (7.5%) and the year 2006

a sustained period of growth that comenced at the

also registered the highest increase in imports of the entire period (9.1%).

beginning of the decade. The decline was justified by the difficult period experienced by the world economy

Analysing each one of the components of the trade balance individually, the services sector, even though they account

and above all in Portugal’s principal markets. This led to sharp declines in demand that were only partially

for only 32% of total sales and 16% of Portugal’s purchases

compensated by the higher demand outside the EU, as

abroad, registered over the period 2004-2008 an annual

will be explained later.

average growth rate of 11.1% for capital coming inwards (credits) and 9.8% in the outflows of capital (debits).

The opposite happened to Portugal’s purchases abroad which maintained a healthy rate of growth and and thus

It is worth noting that, not only did growth in credits in absolute terms exceed 50% in five years and 45% for debits, but also this component presented a surplus in the overall balance, with a coverage ratio that in 2008 was over 150%.

contributed towards a deterioration in the trade deficit which reached almost 23 billion euros in 2008.

In summary, despite expectations of a decline in Portugal’s

In the year 2007 there was a greater increase in capital

international trade, at least for the duration of 2009, a

outflows (+19%) whereas in 2006 there occurred the largest

gradual upturn is hoped for in 2010, even though these

increase in purchases of services from abroad (+15%).

forecasts contain a high level of risk.

Portuguese Trade Balance (services)  

2004

2005

2006

2007

2008

AAGR (%)

Credits

11,853

12,255

14,635

16,980

17,928

11.10

Debits

7,838

8,412

9,681

10,490

11,380

9.81

Balance

4,015

3,843

4,954

6,490

6,548

Coverage ratio (%)

151.2

145.7

151.2

161.9

157.5

Unit: Millions of euros (current prices) Source: Banco de Portugal (Balance of Payments) Notes: Credit – Capital inflow;

Debit – Capital outflow;

AAGR – Average annual growth rate

Portuguese Trade Balance (goods)  

2004

2005

2006

2007a

2008a

AAGR (%)

Exports

29,870

30,710

34,511

37,589

37,961

6.27

Imports

46,598

49,138

53,100

57,056

61,175

7.05

Balance

-16,728

-18,428

-18,589

-19,467

-23,214

64.1

62.5

65.0

65.9

62.1

Coverage ratio (%) Unit: Millions of euros (current prices) Source: INE – Instituto Nacional de Estatística Notes: (a) Estimates for January-December;

AAGR – Average annual growth rate

51

aicep Portugal Global Portugal - Country Profile (May 2009) Exports will continue to be one of the principal drivers

2.2% das imports in 2008, shares that were slighly lower

of Portuguese economic growth, and for this reason it is

than those of the year before. The United States was the

important to continue to depend on the “excellence”, quality

seventh most important client, having fallen two places in

and innovation of our goods and services and encourage

ranking compared with 2007, and was the 11th provider,

businesses to improve their competitiveness in the context of

accounting for 1.7% of total goods imported. Last year,

a global market that has become ever more aggressive.

exports to the United States dropped 25% (or 445.9 million euros) from 2007 levels, and were the primary reason for

10.2 Main trading partners In 2008, all of the EU countries taken together accounted for 73.7% and 73.5%, respectively, of all Portuguese exports and imports. As a result, Portugal’s principal clients that year were its EU trading partners, in particular Spain (27.2%), Germany (12.9%), France (11.7%), and the United Kingdom (5.5%). In like manner, the most

Portugal’s overall negative export experience.

Portuguese-speaking African countries (known by the Portuguese acronym PALOP) comprise an important partnership for Portugal with an ever growing interest in those markets on the part of Portuguese companies. The PALOP members took up 4.6% of Portuguese exports in 2008, and this corresponds to a significant share of the imports of these countries,

important suppliers were Spain (30.8%), Germany (12.4%),

especially Angola, which, as already noted, in 2008 became

France (8.3%), and Italy (5.3%).

Portugal’s fourth most important client as it rose two places in ranking compared with the prior year. However, its importance

Despite this, there continues to be a gradual decline in the

as a provider of Portuguese imports is not so significant and

proportion of trade accounted for by the EU. In 2006, the EU

accounts for approximately one percent of the total.

represented 77% of Portugal’s exports and 76% of its imports. At the same time, new markets have risen in importance such as Angola, which has become the fourth most important client, Singapore is now in tenth place and Malaysia occupies the twelfth spot, not to mention the United States which ranks as the seventh most important market.

Exports to Latin America also have gradually increased in importance for Portugal, especially with those trade partners that are members of MERCOSUL. These countries now account for 1.2% of total exports and provide 3.3% of imports, with Brazil being the most important trading

The quota of the three countries in the North American Free

partner, especially as a provider, given that Portugal buys a

Trade Association (NAFTA) amounted to 4.6% of exports and

considerable volume of petroleum products from that country.

Geographical Distribution of Portugal’s International Trade in 2008 Exports

Imports European Union

European Union

PALOP

MERCOSUL

NAFTA

NAFTA

MERCOSUL

PALOP

Others

Others

Source: INE Notes: EU – Data for January to December are estimates; Third country data – Preliminary results for Jan/Dec (first-run data)

52

aicep Portugal Global Portugal - Country Profile (May 2009) Asia too has increased its share in Portugal’s foreign trade,

Another important aspect to emphasize concerning

thanks to the influence of China and some other countries

trade is the development of greater market

such as Singapore and Malaysia. China is more important on

diversification, especially with regards to sales abroad,

the import side while the other two countries have a greater

where countries such as Angola and Singapore

weight in Portuguese exports. In 2008, Asian countries

appeared among the top 10 destinations, both countries

represented 5.0% of Portuguese exports and 5.8% of

that were not on that list in 1986. Another notable

imports. China provided 2.2% of our imports, while 3.3% of

development is that among the eight markets that

our exports were destined for Singapore and Malaysia.

showed the highest growth in value terms, these are all countries that are outside the European Union (Angola,

In analyzing developments on a country by country basis

Singapore, Mexico, Algeria, Morocco, Nigeria, Brazil,

and comparing results beginning with the year that Portugal

and Saudi Arabia), and that among the 20 markets

joined the EU, what really stands out is the sharp increase

accountable for most of the growth in Portuguese

in the importance of Spain which has become Portugal’s

exports, only five are EU partners (Ireland, Czech

top trading partner with its share rising from 6.6% in 1986

Republic, Finland, Poland, and Romania), and four of

to 27.2% in 2006 on the client side, and from 10.9% to

those are among the group of countries that comprise

30.8% on the supplier side, over the same period.

the 12 member states that recently joined the EU.

Portugal’s Main Trading Partners – 1986-2008 Clients - 1986

Source: INE

Clients - 2008a France

Spain

Germany

Germany

United Kingdom

France

USA

Angola

Netherlands

United Kingdom

Spain

Italy

Others

Others

Notes: (a) EU – Data for January to December are estimates; Third country data – Preliminary results for Jan/Dec (first-run data)

Suppliers - 1986

Source: INE

Suppliers - 2008a Germany

Spain

Spain

Germany

France

France

Italy

Italy

United Kingdom

Netherlands

USA

United Kingdom

Others

Others

Notes: (a) EU – Data for January to December are estimates; Third country data – Preliminary results for Jan/Dec (first-run data)

53

aicep Portugal Global Portugal - Country Profile (May 2009)

10.3 Composition of trade

major changes in terms of shares, although in value terms there was a slight decline from the previous year. Portugal is

In examining the composition of Portuguese exports by

the global leader in the cork market, with a share that is over

groups of products, one can note that export growth

60% of total world exports of the product.

is now being driven by new sectors rather than by the traditional industries, and this reflects the structural

Even though Portuguese exports last year rose only 1% in

changes stemming from the impact of foreign investment

value terms, oil products recorded the largest contribution

and the strength of those sectors that incorporated the

to export growth last year with 138.9% of total growth,

most technology and value added. The most important groups of products exported in

Breakdown by Groups of Products in Portugal’s Foreign Trade in 2008

2008 were machinery and tools, vehicles and transport equipment, base metals, clothing, plastics and rubber, oil products, minerals and mineral products, and food products, all of which represented close to 69% of total

Skins and Leather Optical and precision instruments

Portuguese sales abroad. Machinery and mechanical and electrical tools (19.1% of total exports in 2008, compared with 18.7% in 2005) constitute another significant group in foreign sales and they include modern companies offering certified products and high

Footwear

Wood and cork

Textile materials

Wood pulp and paper

technology and are growing in importance, including among the most important, moulds for the plastics industry and iron working machinery, as well as electric lines and cables,

Chemical products

Agricultural products

transformers and electronic components. Food products

Textile materials, clothing and footwear (representing 14% of sales abroad in 2008, versus 15% the previous year) are

Minerals and mineral products

the most important traditional Portuguese exports, but they

Oil products

show a clear trend towards an increase in value added due to investments made by the sector in order to improve the

Plastics and rubber

quality and “design” of their products.

Clothing

Vehicles and other transport materials represented 12.3% of all goods exported in 2006 (against 12.7% the previous year), reflecting a contractionary phase in the industry which is also having repercussions on subsidiary subsectors

Base metals

Vehicles and other transport material Machinery and tools

(components and accessories for motor vehicles). Exports

Imports

The wood, cork, paper and wood pulp industries together provided 8.4% of total exports in 2008, and have shown no

Source: INE – Instituto Nacional de Estatística Nota: Preliminatry results

54

aicep Portugal Global Portugal - Country Profile (May 2009)

10.4 International trade13 and the regions

followed by agricultural products (77.2%), food products (47.2%) and plastics and rubber (29.3%). In the composition of imports, the market leaders were

In 2007 (the latest regional breakdown available), the North,

machinery and tools (19.1%), followed by oil products

the Centre and the Alentejo were the regions where exports

(16.8%), vehicles and transport equipment (11.8%), base

were greater than imports with coverage rates of 112.2%,

metals (9.3%), agricultural products (9.1%), chemicals

112.3% and 108.9%, respectively. Only the coverage ratio

(8.6%), and plastics and rubber (4.7%), all of which together

of the North increased somewhat when compared with

accounted for 79% of Portugal’s total purchases abroad.

the previous year. There was also some improvement in the negative coverage ratios of the autonomous regions, as these

Portugal maintained its dependency on oil products which

became less negative compared with a year earlier and, in

increased in importance as their share rose to 16.8% in

the case of Madeira, the improvement there was due to both

2008 from 14% in 2007, keeping pace with sharp price

an increase in exports as well as a decline in imports. The

increases for petroleum and natural gas in the international

coverage ratios were lower in the remaining regions.

markets, and were the category most responsible for the growth in imports from up 4% to up 7% over the period. Data for industrial manufactured products classified by degree of technological sophistication indicated that those products that are designated high and medium technology products represented 41.7% of all Portuguese exports of this kind in January-November 2008, whereas low technology products accounted for only 34.8% (-17% compared with the same period one year earlier).

Of the three regions that most contributed to international trade (North, Lisbon and Centre), Lisbon was the one that showed the largest deficit, since the value of its exports did not even reach one-third that of imports, due to the fact that, on the one hand, trade composition is quite varied, and on the other hand, there is a great concentration on new technology companies, and these characteristics are responsible for the growing importance of imports. The Autonomous Region of the Azores recorded the highest growth rates for both exports and imports which grew by 32% and 22%, respectively. These results stemmed from the high value and percent change of sales of agricultural products and purchases of manufactured products. Next in importance was the Algarve that saw its exports rise 16%, due to the sales of agricultural products, while its import growth surged 22%. As far as principal trading partners are concerned, the EU dominates in all regions of the Continent both as to exports markets for Portuguese products as well as the region from where most imports originate. In the Alentejo, Algarve, Centre and North (purchases only), the share of EU countries exceeded 80% of the total. In Lisbon its share was less, but always greater than half the total reached by flows in both directions. In the Autonomous Regions, sales

13

Declared values

55

aicep Portugal Global Portugal - Country Profile (May 2009) to countries outside the EU dominate in Madeira as in the

11. Investment

Azores with 67% and 51% of the total respectively, but only in the Azores do these countries constitute the principal source of purchases made abroad with 57% of the total. In Madeira, the EU is the primary source for imports of that island (71%). There is also some concentration noted concerning the regions’ foreign trade with certain countries, such as the four top markets, both as to outflows and inflows, large enough to account for more than half of regional flows.

Gross foreign direct investment in Portugal and Portuguese direct investment abroad both declined in 2008, but the reduction was much greater for the latter. Foreign direct investment fell only 2% while Portuguese investment abroad dropped 32%. In terms of flows, the former rose almost 8% from the year before while investments by Portuguese companies fell by more than half – actually by 64% – compared with a year earlier.

Spain, as might be expected, was the foremost trading partner of all the Portuguese regions on the Continent, with shares

This rather unfavourable situation results from the strong

ranging from 26% in the North to 48% in the Algarve. In

negative impact of the international financial crisis, not

Madeira, Angola took top spot by purchasing 42% of the

only on those countries that are large foreign investors,

total exported by that autonomous region, and in the Azores,

but also on the major receptive markets, thereby leading

on-board supplies and provisions with 29% of the total

companies to reassess their strategy and position vis-à-vis

prevailed, followed by the United States market with 7.5%.

the rest of the world. However, this negative performance comes after many successful years in which Portugal was

As for suppliers to the Portuguese regions, Spain occupied

an important destination for foreign investment because of

the foremost position with significantly high shares. The

so many favourable social and economic features such as

smallest bilateral share was with the Azores with 26%

political stability, a stable social situation and a high quality

of the total, while the largest occurred with the Algarve,

of life, while being part of the euro area was an important

with Spain accounting for more than half of all products purchased abroad by that region. Besides the importance of the EU countries, (after Spain we

consideration as was having a qualified labour force available at reasonable cost and good prospects for higher productivity and strong economic expansion.

have Germany, France, the United Kingdom, and Italy) in nearly all regions it should be noted that the key role played by Angola which, besides being the number one client for Madeira, can be found among the top 10 clients of the Centre, Lisbon, the Alentejo, and the Algarve. Then follows the United States, which although it is losing its overall share in Portuguese trade, still maintains a key share among the clients of the North, where Singapore and Malaysia have surged in importance, perhaps due to the exports of memory chips from Quimonda in Vila do Conde, as well as in the Centre and in Lisbon. In so far as imports are concerned, Nigeria was the second most important supplier to Lisbon and the Azores with a quota of 3% e 4%, respectively, Turkey accounted for a quota of 15% in the Azores and 8% in Madeira, and Brazil was the supplier of the following shares for these regions: Centre (3%), Lisbon (3%) and Madeira (10%). 56

aicep Portugal Global Portugal - Country Profile (May 2009)

11.1 Foreign direct investment trends in Portugal

Foreign Direct Investment in Portugal by Country of Origin in 2008a

Foreign direct investment (FDI) in Portugal, amounted to around 30 billion euros in gross terms during the last five years, with 2006 being the year in which there occurred the largest share of the total for this period. In terms of investment flows, 2006 was also the year in which the highest investments were made, namely 8.5 billion euros, while the following year there was a very sharp decline followed by a slight recovery in 2008.

Foreign direct investment trends in Portugal

Germany

France

Sweden

United Kingdom

Switzerland

Belgium

Spain

Luxembourg

Others

Netherlands

Canada

Source: Banco de Portugal: Statistical Bulletin for March 2009 Unit: Millions of euros

Note: (a) Gross investment

11.1.2 F oreign direct investment by major sectors The breakdown of FDI by sectors shows that the manufacturing industry is the most important economic activity, contributing 6.3% to the overall growth in FDI; followed by trade, real estate operations, leasing, and services to companies, and, much further down, by financial activities. 2004

2005

Gross investment

2006

2007

2008

Net investment

Source: Banco de Portugal, Statistical Bulletin for March 2009

Foreign Direct Investment in Portugal by Major Sectors in 2008a (%)

Unit: Millions of euros

The stock of FDI reached almost 72 billion euros at the end of 2008, a level that was 8.4% lower than that of the previous year.

11.1.1 Main investors by country The EU accounts for most of the foreign capital invested in Portugal with 87.4% of total gross FDI in 2008. In recent years the five largest investors were Germany, the United Kingdom, Spain, the Netherlands,and France. Their rankings vary among them from one year to another, but together they accounted

Manufacturing Industry Wholesale and Retail Trade, Repairs, Lodging and Restaurant Services

for 75.4% of total FDI in 2008, in gross terms. Besides the EU

Real Estate Operations, Leasing and Services to Companies

countries, other important FDI providers are Switzerland which

Financial Services

Transport, Warehousing and Communications Electricity, Gas and Water Construction Other Activities

accounts for 6% of the overall total and Canada with 2.1%. In 2008 they ranked sixth and eighth in importance, respectively.

Source: Banco de Portugal: Statistical Bulletin for March 2009 Note: (a) Gross investment

57

aicep Portugal Global Portugal - Country Profile (May 2009)

11.1.3 R  ecent foreign direct investment projects in Portugal

speed boxes and motors of the group. The project is estimated to reach a sales volume of 2.6 billion euros and a value added of 447 million euros in 2013.

In the last few years, the most attractive sectors for foreign investors were the following: automotive and components,

Tesco, a Japanese multinational company in the automobile

energy, biotechnology, electricity and electronics sector,

components industry and a subsidiary of Honda, opened

chemicals, information and communication technology

a new production unit in the town of Famalicão, close to

(ICT), and the tourism sector.

the plant it already occupies in Trofa, creating more than 50 new employment opportunities. Built by incorporating

As concerns the most recent projects undertaken by foreign

some of the most modern technology such as reutilization

investors, among the ones that had a profound impact on the

of rainwater, special air cleaning filters, and the use of as

Portuguese economy in a structural sense are the following:

much as possible natural light with the purpose of reducing energy consumption, this factory will produce motor parts

The choice of AutoEuropa by Volkswagen for the production

as well as air conditioning compressors.

of their new minivans (MPV) and for a fourth model in the Palmela plant, a factor that will increase the contribution of

Iberdrola, one of the four largest companies operating

this company to the Portuguese economy to about 2% in

in the energy sector, intends to invest about 1.7 billion

2010 (in 2007 its contribution to Portugal’s GDP was 1 %).

euros in the construction of four new dams in Portugal, namely in Gouvães, Padroselos, Alto Tâmega, and Daivões.

Another project with a major impact on the local economy

The outlays will be made between 2012 and 2018 and

and that also bears a strong technological component is that

the exploration of the undertakings will take place over

of Embraer, the third largest producer of airplanes in the

a period of 65 years. These new plants will be capable of

world and global leader in the production of commercial jets

producing about 2,200 gigawatts/hour per year, equal to

of up to 120 seats, that will invest 148 million euros in two

3% of Portuguese electricity consumption, and which will

factories in Portugal over a period of six years. Located in

be sufficient to meet the demand for annual consumption

Évora, the first factory will produce metal structures and the

by approximatley one million people. Moreover, these

other composite materials for use in airplane construction.

hydrelectric facilities will contribute toward the reduction of

With production scheduled to come on stream in 2009, this

Portugal’s energy dependence.

investment will generate 570 direct jobs in one of the most depressed regions of Portugal.

The Hydroelectric Complex of Alto Tâmega, besides being one of two large projects of its kind built in Europe in the last 25

Although the auto sector is in complete crisis, Renault invested

years, will contribute towards the hydroelectric development

28.8 million euros in its factory at Cacia, for the purpose of

of the of the da Bacia do Douro foresees the the creation of

building speed boxes, oil tanks and manifolds among other

3,500 direct jobs and about 10,000 indirect jobs.

mechanical components. This investment is at the forefront of the strategy to provide diversification based on cost

Repsol will expand its presence in the petrochemical

components, presenting the investor with an opportunity to

complex in Sines. This Spanish company which doubled its

gain value for its clients through research and development

presence in Portugal over the past three decades, currently

and will permit Renault C.A.C.I.A. to be the sole supplier of

accounts for a significant presence in the commercialization

manifolds for the joint venture Renault-Nissan and one of the

of oil products and is present in the petrochemical

suppliers of mechanical components for the new series of

complex at Sines where it will invest one billion euros in 58

aicep Portugal Global Portugal - Country Profile (May 2009) its expansion, and this will allow an increase of 40% in

research and development centre. The total amount of

the production of ethylene cracker (570,000 tons/year).

the investment should be around 65 million euros and will

The investment provides for the construction of new

generate 225 new jobs of which 55 for highly qualified

polyethylene and propylene units that will triple the current

workers for its research centre.

capacity of the petrochemical complex, in addition to a cogeneration unit of 45 megawatts. This project, one of

The American multinational Cisco Systems decided to

the 10 largest undertakings globally by Repsol, will create

establish its first sales support centre at the European

about 500 new positions both directly and indirectly when

level with a portfolio of 20,000 products. The reasons for

the projects become operative, and close to another 1,500

choosing our country were several: cultural and linguistic

employment opportunities during the construction phase

diversity, a good work ethic, an abundance of qualified

and will have a major impact in terms of value added and

resources, and competitive economic factors. Within the

exports while generating more than 1.2 billion euros of

scope of this investment, Cisco entered into a partnership

annual production, 80 % of which will be for export.

with the Portugal Telecom Foundation in order to recruit collaborators with disabilities and handicaps, and thereby

Also in the Sines area, the multinational company La Seda

give support to the social inclusion program of that firm.

de Barcelona, the European leader in polyester, decided to establish a petrochemical plant in Sines that will produce

Nokia Siemens has five research and development centres

about 700,000 tons per year of polyester (PTA – purified

in Portugal, with 1,500 highly qualified engineers.

tereflatic acid), and is planning for the construction of a new unit in the field of pre-forms (moulds for plastic packaging).

The IKEA group will continue to invest in a major way

The new factory represents an investment of 400 million

in the Portuguese market with a multi-phased project. It

euros and the creation of 150 direct jobs and 500 to 700

plans to invest more than 660 million euros in Portugal

indirect positions. The project will be used to cover the actual

up to 2015 for projects that will include the installation

lack of PTA – which is the main raw material for the strategic

of industrial units for the production of wood and wood

product of the plant, PET (polymer, thermoplasticor plastic

products with output destined for export markets in Europe

used in packagings) – in the European market.

and in the United States, the construction of new IKEA stores, in addition to those already existing in Alfragide and

Air Liquide, the Iberian Peninsula leader in the production

Matosinhos, and the opening of a new shopping centres of

of industrial gases decided to install in Sines a plant for

the Inter IKEA Centre Group.

the separation of gases from the air that will produce 400 tons/day of nitrogen, oxygen and argon in liquid form. The

Lastly, it is worth noting some examples of companies

new unit, whose opening is due towards the end of 2009,

that found Portugal an attractive place to invest in shared

will use the most up-to-date technology of the group in

services centres. These are Microsoft, Siemens, Qimonda,

order to save energy. Air Liquide has two other investments

IBM, Fujitsu, Santander, and Solvay. This choice was due to

totaling about 70 million euros invested in a new hydrogen

several factors, among the most important were: availability

production unit in Estarreja and in a centre to fill up bottles

of qualified workers with widespread knowledge of

located in Arruda dos Vinhos, in the Lisbon region.

foreign languages in all the key cities of Portugal; highly skilled labour force in the areas of finance and information

Agni, Inc. from Malaysia will build a factory in Portugal,

technologies; reasonable labour costs; cosmopolitan

in Montemor-o-Velho, for the production of fuel cell

culture and leisure time activities; and a favourable climate

batteries. Besides this factory, the project also includes a

(springtime weather all year round). 59

aicep Portugal Global Portugal - Country Profile (May 2009)

11.2 Trends in Portuguese foreign direct investment

three EU countries Denmark, Netherlands and Spain, and in subsequent years, other countries gained in importance as was the case of Brazil, and more recently, Angola and some

Portuguese foreign direct investment (PFDI), in gross terms,

countries of Eastern Europe (Poland, Romania and Hungary).

increased substantially during the decade of the 1990s, reflecting a favourable global economic climate, and resulting in a greater participation by Portuguese companies in international markets. Until 2000, the increases in PFDI were significant, transforming Portugal into a net exporter of capital, which was

It is worth noting that, in 2004, Angola accounted for 1% of total PFDI, but by 2008 it had more than quintupled its share, which in value terms corresponded to an increase from 103 million euros to 588 million euros.

a reversal of its long-standing position as investment recipient. In the last five years, 2007 was the year that saw the largest capital outflows abroad with a total amount of about 15 billion euros.

Portuguese Foreign Direct Investment by Major Recipients - 2008a Netherlands

In net terms, PFDI has followed an irregular pattern, with

Spain Brazil

three of the last five years showing outflows valued at

Angola

between four and six billion euros and the remaining two

United Kingdom France

years, values of about two billion euros.

Luxembourg Denmark USA

Trends in Portuguese Foreign Direct Investment

Ireland Others

Source: Banco de Portugal: Statistical Bulletin for March 2009 Unit: Millions of euros

Note: (a) Gross investment

11.2.2 Main sectors The breakdown by major sector of economic activity indicates that real estate operations, financial activities, manufacturing, and trade were the preferred choices for Portuguese investors abroad. 2004

2005

Gross investment

2006

2007

2008

Net investment

Source: Banco de Portugal: Statistical Bulletin for March 2009 Unit: Millions of euros

Portuguese Foreign Direct Investment by Sectors – 2008a

At the end of 2008, the stock of PFDI had reached 45.7

Real Estate Operations, Leasing and Services to Companies

billion euros, representing a decline of 0.6% compared

Financial Activities

with the total of a year earlier.

Manufacturing Wholesale and Retail Trade, Repairs, Lodging and Restaurant Services

11.2.1 Portuguese foreign direct investment by major recipients

Construction Transport, Warehousing and Communications Electricity, Gas and Water

In analyzing developments over the last five years we note that there is considerable diversification among the destinations for PFDI. However, in 2004 there was a clear domination of

Other Activities Source: Banco de Portugal: Statistical Bulletin for March 2009 Note: (a) Gross investment

60

aicep Portugal Global Portugal - Country Profile (May 2009)

11.2.3 R  ecent projects indicating the internationalization of Portuguese companies

a project of almost 60 km in size, a tunnel of 290 metres and 57 bridges and viaducts, an undertaking that is part of the Mexican infrastructure plan and represents one of the fundamental pillars of the national roadway plan of the

In the last two decades there was considerable internationalization of a large number of Portuguese companies which had a great deal of success in large foreign projects. This important step in the consolidation of a foreign presence in external markets, catapulted Portugal to a noteworthy position among capital exporting countries.

This process of internationalization can be characterized as a sustained effort (particularly since Portugal’s accession to the EU) marked by the widening number of participants (large and medium sized companies) and by the progressive diversification of markets so that Portuguese firms are present in nearly every part of the world. Small and medium sized industries acquired a leading role, following a first phase when large companies dominated the process, so that a broad representation of Portugal’s businesses now have become foreign investment players. This success also included a greater diversification of investments into “new” and more distant markets, even though they might have been more difficult to enter.

country. It will permit completion of a direct connection between the port of Vera Cruz (the most important seaport of Mexico) and Mexico City, the capital, whose construction, operation, exploration, and maintenanace over a 30 year period will come to around 400 million euros.

In Poland, the affiliate of the group in the market in partnership with an Austrian company won the contract for the construction of a roadway and highway 180 km from Warsaw (its largest ever project in that country).

In Peru, as part of a consortium, the company recently gained a concession for a 30 year period that includes the operation of already existing installations and the construction and operation of a container terminal at the Porto de Paita. The project involves an annual activity of 140 mil TEUS and a cargo capacity of 200,000 tons, with the initial phase having an investment of 98 million euros.

Among the largest Portuguese companies, the following

Lena Construções signed a contract as part of a consortium

stand out: EDP Group, Cimpor Group, Galp Energia, Sonae

involved in the construction and expansion of Puerto de

Group, Amorim Group; banking in general; PT (Portuguese

la Guaria in Venezuela, in an investment that totals 658

Telecom); the major construction companies operating in

million dollars. In addition to Venezuela, this company

civil and public works (Mota Engil, Teixeira Duarte, Soares

has a presence on three continents: in Europe (Bulgaria,

da Costa, etc.); Efacec Group; Pestana Group; Visabeira

Spain and Romania), Africa (Algeria, Angola, Morocco, and

Group; Sogrape Group; Portucel/Soporcel; Martifer.

Mozambique) and in Martinique in the Americas.

In the civil construction and public works area there

The company Irmãos Cavaco is involved in a mega-project in

are many successful cases of Portuguese companies

Angola that involves the construction of what will become

which alone or integrated in consortia, have come to

that country’s foremost fishing port, conducting dredging

win important and diversified projects in their field, and

operations in the famous Baía dos Tigres. Situated close to 100

where thay have also diversified the markets in which

miles to the south of the province of Namibe, which is one of

they operate. We will point out a few which, due to their

the richest fishing areas of the Angolan coast. This project is

characteristics and markets prove the quality and versatility

part of the so-called Development Plan of the Baía dos Tigres,

of Portuguse companies present in this sector.

which aims to deal with the need to recover and rehabilitate

Mota & Engil won a concession for an autopista in Mexico,

the entire local industrial area which covers 14 fish processing 61

aicep Portugal Global Portugal - Country Profile (May 2009) plants, including seven that deal with fishmeal and fish oil. Also

At the beginning of 2009, the company acquired almost

in Angola, in a consortium called Angomarinas, the Irmãos

100% of the social capital of Yibitas, an important cement

Cavaco company signed on to a project for the construction

company in Turkey, which operates in the areas of cement,

and explotation of a marina in Luanda, that includes a

concrete and mortar. The company has three factories for

component that will involve the promotion of real estate.

the integrated production of cement and three operations

With its Portuguese partner, Teixeira Duarte (50%/50%), the

for grinding that correspond to a global installed capacity

construction company won the bidding for a contract for the

of about 3.5 million tons per year. Yibitas also has 12

construction of another marina in Angola. In terms of work

plants for the production of ready mix concrete and two

volume, the business involving the two projects is expected to

aggregate explorations.

be worth 100 million dollars (68.3 million euros). In the plastics sector, Logoplaste was chosen by Johnson Irmãos Cavaco also operates in Algeria, Martinique and São Tomé and Príncipe. In the Maghreb it has a share of 24% of the consortium Grupo Marítimo Português that won a series of orders estimated to be worth 77 million euros. In Martinique, in the Caribbean, where the company

& Johnson for the creation of a new production unit in Italy for the purpose of manufacturing plastic packaging for a range of antisceptic mouthwash products. This new unit marks the growing presence of Logoplaste in the healthcare sector.

has a 60% stake in a consortium with Abrantina, there is currently under way the construction of a fishing port at Grand’Revière, an undertaking budgeted at 25 million euros. In the cement area, there is a cooperation contract valid for 50 years, between CIMPOR and the govenment of the Chinese district of Shanting in the Province of Shandong, for the construction of an integrated factory for the production of clinker and cement, improving the production capacity of cement by 1.8 million tons per year to more than 5 million.

During 2009, Logoplaste inaugurated its new plant in Elst, in the Netherlands, as part of a multi-year exclusive and renewable contract that engages it in work together with the multinational food giant Heinz. This factory will produce packaging using a new technology, known as “multicamada PET”, which was developed by Logoplaste in a partnership arrangement, that allows for greater durability and better conservation capacity.

The same group acquired through the Spanish subsidiary

In the food and beverage sector, a major investment is that of

Cimpor Inversiones the assets held by CEMEX in the Island of

Unicer which invested 100 million euros in a production facility

Tenerife – these are a cement grinding operation of 80,000

in Angola. The unit was needed due to the relevant importance

tons per annum, seven ready mix concrete plants, a maritime

of the export of beer and for rationalizing transport costs. The

terminal and a pozzolana quarry (to process volcanic ash)

plant is due to become operational in 2010, when it will have a

– and two share participations of 50% each in the capital

capacity to produce 200 million litres of beer.

of the Spanish companies operating in the Canary Islands. One of them operates a mortar factory in Tenerife, while the

The most important developments involving the

other, together with its subsidiaries, has a cement grinding

internationalization of Portuguese companies in the last

operation in Gran Canaria that has an output of 1.5 million

few years have been primarily in the energy sector and in

tons per year. In addition, there are seven port terminals, five

particular in the area of renewable energy, with the goal

ready mix concrete grinding operations, three mortar plants,

of not only acquiring a stake in the international energy

one pozzolana quarry and four prefabricated installations

market but primarily to increase the installed productive

located in three different islands.

capacity of renewable, clean energy. 62

aicep Portugal Global Portugal - Country Profile (May 2009) Currently, EDP Renováveis (EDPR) already has a pipeline of

market, and to produce photovoltaic solar panels in 2008

wind farms under development with a total power generation

in its factory at Oliveira de Frades, is already present in

of 13,950MW, distributed in the United States, Spain, France,

Eastern Europe, Germany, and the United States where

Belgium, Poland, Romania, in addition to Portugal.

an agreement was reached between Eviva Electricity and Spinnaker Wind to develop wind farms in the southern

In Spain, the company will develop new wind farms in Galicia,

part of the State of Texas with the goal of reaching 800

with a capacity of 125.7 MW. These new projects located at

megawatts in 2012. Martifer is also present in Italy, one

Corunha and Lugo, are in addition to the six farms that are

of the markets with a great potential on the international

already in operation in the Galician community, where it has

scene. The photovoltaic solar farms that Martifer Solar

had a presence for the last 10 years. This allotment in Galicia

built in Vaglio di Basilicata, in the province of Potenza (21

reinforces the position of EDP Renováveis as the third most

bi-axial solar energy farms which will avoid the emission of

important wind farming operator in Spain, where it has a

more than 2,000 tons of CO2 per year into the atmosphere)

presence in eight autonomous communities and has amassed

represents the largest facility in the Basilicata region,

an installed capacity of 1,761 MW.

exceeding total installed capacity linked to the network in the province of Potenza. In their entirety, these energy

In Eastern Europe, it acquired wind farms in Poland (Relax

farms have become part of 10 largest installations tied into

Wind Parks) and in Romania. In the latter, the investment

the Italian network which places Martifer Solar among

involved the acquisition of 85% of two companies, Renovatio

the most important companies holding solar photovoltaic

Power SRL and Cernavoda Power SRL, which have projects in

installations in the country across the Alps.

the wind energy production projects totaling 736MW. Galp Energia also stands out in this sector. Thanks to major In the United States, EDP acquired Horizon Wind Energy at

petroleum discoveries along the Brazilian coast, it will

the beginning of 2007 and as a result became the world’s

have significant gains in the medium term through the

fourth largest producer of wind energy. Within the Group’s

consortium in which it operates, together with Petrobrás

“portfolio”, the American market constitutes 42% of EDP

and the BG Group. The consortium explores the deep

Renováveis’ total installed capacity, its second most important

waters of Bacia de Santos, and recently announced the

market after the Iberian Peninsula where EDP already has

discovery of a significant quantity of petroleum in the

11 wind farms. In June 2008, it inaugurated its largest wind

block BM-S-11. In the Iara well, held 10% by Galp, a

farm, Lone Star, located in Texas, the state that already has the

reserve of petroleum and natural gas was identified that

highest wind production potential with 400 MW of installed

has a potential output of between three and for thousand

capacity and which produces the equivalent of the energy

barrels, much higher than originally estimated. In this same

consumed by 120,000 families. Also, the wind farms Meridian

basin, Galp Energia also has participations in three other

Way (201 MW), Pioneer Prairie (201.3 MW) and Rattlesnake

blocks: BM-S-8 (14%), BM-S-21 (20%) e BM-S-24 (20%).

Road (102.9 MW), installed respectively in Kansas, Oregon and Iowa, already are in full commercial operation marking

EFACEC, in partnership with two Indian companies, will

the company’s appearance in two new states, Kansas and

open a new factory in New Delhi in India, to produce

Iowa, and reinforcing its presence in Oregon.

medium and high tension equipment in a joint investment valued at 10 million euros. The new factory was built to

Martifer, a company which began to produce wind towers

meet the needs of its two Indian partners, one factory for

in 2004, thus marking its start in the renewable energy

the production of medium and high tension components 63

aicep Portugal Global Portugal - Country Profile (May 2009) will serve the Far East market and the other will be directed

State of Bahia and was elected in 2007 the best five-star

specifically for the Indian market.

hotel in Brazil, having received the trophy entitled Catavento de Prata14. The opening of yet another unit is expected at the

In the United States, the company will open a new factory

end of 2009 in the city of Fortaleza: “Vila Galé Cumbuco”.

to manufacture power transformers in the state of Georgia (USA), a unit that will employ about 400 workers. It is due

Only in Brazil is the pipeline of Portuguese tourist projects

to become operational around mid 2009.

expanding significantly; besides the two aforementioned groups, there are investment projects being pursued by

In Brazil, it will acquire two engineering companies in order

the Espírito Santo Group, Dorisol, Oásis Atlântico, João Vaz

to assure qualified resources that will permit it to meet the

Guedes, Reta Atlântico, among others.

needs of the three electricity plants that it plans to develop, and other opportunities that may come up in that market.

Besides the previously mentioned examples, there are also noteworthy successful investments in foreign ventures by

Many Portuguese companies have also gotten involved in the tourism infrastructure sector on an international scale and several are operating in various countries abroad. Examples include such groups as Pestana and Vila Galé, which have an important portfolio of investment projects,

small and medium sized Portuguese companies, such as Kyaia (Fly London) and Calzeus (Swear) (footwear); Cin (paints); Coelima (home textiles); Compal (food industry); Impetus (clothing); Lameirinho (home textiles); Lanidor (clothing); and Renova (paper for household use).

primarily in Africa and Latin America. In non-traditional industries or in high technology, there The Pestana Group, one of the major players on the Portuguese tourism scene, and one of the top 100 hotel chains in the world, has a presence in six countries: Brazil, Argentina, São Tomé and Príncipe, Mozambique, South Africa, and Cape Verde.

In addition to well defined projects, the Pestana Group continues to develop and prospect new opportunities, such as pousadas in Morocco, Macao and various African countries. It already has plans to expand into new Pousadas in Brazil, which is essential in order to extend the Pousadas concession for five more years. This objective implies creating 220 rooms abroad. Among various projects, the Pestana Hotels & Resorts unit has on its drawing board a hotel in Berlin, as well as in London and, within five years, also in Luanda.

can be found key companies such as Critical Software (the world leader in developing software for critical information systems), Ciscog (the industry leader in the European software market for the planning and management of resources of railway companies) and MNI – Médicos na Internet (Doctors on the Internet) that are dedicated to the development, distribution and implementation of healthrelated software ALERT®, conceived to create clinical environments without paper, a system that is already in use in hospital units in Brazil, the United States, the Benelux countries and even Malaysia was added to the list recently. In the United Kingdom, a selection of ALERT® products has been adopted by the National Health Service (NHS) for its central purchasing catalogue and the signing of the first contract with a British hospital led to the award of the Business Internationalisation prize granted by the UK Trade and Investment agency.

The Vila Galé Group, which is yet another major national hotel group and one that ranks among the world’s top 250, has 15 units in Portugal and three in Brazil, the last of which was inaugurated in 2007 at the Guarajuba Beach in the

14 The Catavento de Prata award was created to reward companies, institutions and personalities in the entire Brazilian tourism sector that each year show outstanding and meritorious service in the tourism area. The prize is awarded on World Tourism Day.

64

aicep Portugal Global Portugal - Country Profile (May 2009)

12. Tourism

Trends in Incoming Tourism - Arrivals

The World Travel and Tourism Council (WTTC), has reported that tourism activity on a global level probably accounts for more than 10% of GDP, 8% of employment and 12% of exports.

According to the World Tourism Organization (WTO), Portugal ranks among the top 10 European countries in terms of receiving the most foreign tourists at the European15 level, and is among the top 25 on a world scale. 2003

In 2007, Portugal placed 10th in the European rankings with a share of 2.54% and ranked 20th worldwide with a

2005

2004

2006

2007

Sources: INE – Instituto Nacional de Estatística Unit: thousands

share of 1.25% of the market.

Trends in Incoming Tourism - Hotel Nightsa b According to the “Travel & Tourism Competitiveness Report 2009” of the World Economic Fórum, Portugal appears in 17th position in the “T&T Competitiveness Índex” among 133 countries covered, and in 10th position among the EU27, situated ahead of such countries as Ireland, Belgium, Italy, and Greece.

Results from the three indicators that are part of this index indicate that Portugal ranks in 15th place for 2003

“T&T Regulatory Framework”, in 24th position for “T&T

2004

2005

2006

2007

2008

Environment and Infrastructure” and in the 16th spot in the

Sources: INE – Instituto Nacional de Estatística

category “T&T Human, Cultural and Natural Resources”.

Note: (a) Persons staying in a lodging establishment for a period falling within 12 hours

Unit: thousands of one day and 12 hours of the following day. (b) Includes hotel nights spent in estalagens (manor houses), hotels, apartment

In Portugal, the tourism sector accounts for approximatley 6% of GDP, provides employment for about 8% of the labour force directly and makes a positive contribution to the

hotels, motels, pensions, and pousadas

Trends in Incoming Tourism - Receipts

balance of payments. The tourism industry is one of the most important sectors in the Portuguese economy, not only for its monetary contribution to GDP both directly and indirectly, but above all for its strategic importance for the revenues that are generated, for the employment it creates, for the multiplier effect that it has in various areas, and for the positive contribution it makes in enhancing Portugal’s image abroad.

2003 15 Includes the countries of Northern Europe; Western, Central and Eastern Europe; and Southern Europe (European countries of the Mediterranean).

2004

2005

2006

2007

2008

Source: Banco de Portugal Unit: millions of euros

65

aicep Portugal Global Portugal - Country Profile (May 2009) Portugal offers the incoming visitor many comparative

best European islands by readers (over 3.5 million) of the

advantages at various levels: climate, safety, coastal

highly regarded magazine Condé Nast Traveller, showing up in

proximity, quality beaches, golf courses that are recognized

sixth place. For the quality of its hotels, and Madeira also was

internationally for their quality, diversified attractions

ranked among the “25 Top Europe Resorts”, garnering the

(beautiful countryside, casinos, marinas, culture, tradition,

21st place with its famous Reid’s Palace.

gastronomy) and excellent air connections including

According to INE statistics, 12.3 million foreign tourists

commercial, charter and low-cost airliners.

entered Portugal in 2007 (latest available data), that is 9.2% more than the year before. The number of tourist

There are numerous sites to visit, and not to be forgotten are those sites that feature on UNESCO’s World Heritage list which include the historical centres of Oporto, Angra do Heroísmo,

nights spent at hotels reached 26.2 million the 2008 according to preliminary data, a decrease of 2% compared with the year before. Tourist receipts continued to register

Guimarães, Évora and Sintra, as well as monuments in Lisbon,

gains as in previous years and were up 2% in 2007.

Alcobaça, Batalha, and Tomar, the paleolitic etchings of Foz Côa, the “laurissilva” forest on the Island of Madeira, and the

The top five countries providing visitors to Portugal

grape growing areas and vineyards of the Douro River and the

together accounted for 5.1 billion euros in receipts which

Island of Pico in the Azores archipelago.

represented about 68% of the total. The Netherlands and France registered increases over a year ago that showed a

Among a selection of 111 islands or archipelagos, the Azores scored second in a contest of the most attractive destinations in the world, in an initiative of National Geographic Traveler

combined increase of 120 million euros. Most tourists who visit Portugal come from Europe, primarily from the European Union, but Brazil and the United States can

that polled a panel of 522 experts in sustainable tourism.

also be found among the top 10 countries of origin.

The island of Pico was classified by the magazine Islands as being the fourth best island in the world because of its tourist

In 2008, the breakdown of hotel nights spent in Portugal

residency features, and Madeira was chosen as one of the

by foreigners shows that the United Kingdom is the largest

Hotel Nights Spent by Foreigners by Country of Origin (%)

United Kingdom

Germany

Spain

Netherlands

2006

France

Ireland

2007

Italy

Brazil

USA

Belgium

2008

Sources: INE – Instituto Nacional de Estatística, Statistical Bulletin – January 2009

66

aicep Portugal Global Portugal - Country Profile (May 2009) country of origin with 28% of total, followed by Germany

consequent impact on beneficiaries, and for the “power”

(14%); Spain (12%), the Netherlands (8%), and France (6%).

that some of them have acquired in the international context.

The Algarve, Lisbon and Madeira were the regions that

These organizations led to the formation of other entities with

accounted for most of the hotel nights spent in Portugal by

different purposes and different degrees of autonomy. The

foreigners: 84.4% of the total in 2008. The Algarve registered

first group and therefore the oldest group is the World Bank

10.7 million hotel nights (5.6% lower than in 2007), Lisbon

(WB) group which comprises five organizations16, including one

5.9 million (246,000 fewer hotel nights) and Madeira 5.4

non-financial entity that served as a model for the other groups

million hotel nights (+4.8% compared with a year ago).

that were established subsequently such as the Inter-American Development Bank (IDB), the African Development Bank

The North recorded good results, showing an increase of

(AfDB) and the Asian Development Bank (ADB).

4.1% in hotel nights spent by foreigners in 2008 versus the previous year, while in the Alentejo there was an increase

Portugal joined the “Bretton Woods Organizations” –

of 10% although its overall number remains quite small

International Monetary Fund (IMF) and International Bank

compared with other regions: 293,000 in 2008.

for Reconstruction and Development (IBRD) in 1960, followed by other global and regional organizations17 the last of which were in 2002, the Asian Development Bank

13. International and Regional Relations

(ADB) and its Asian Development Fund (ADF) and the Inter-American Investment Corporation (IIC) of the IDB. In the special case of the European Investment Bank (EIB),

Portugal today is a member of a large number of

Portugal’s membership came automatically with its entry

international financial organizations of which the most

into the European Economic Community (EEC), given that

important are the multilateral development banks given

the EIB statutes constitute an annex to the Treaty of Rome.

the objectives that guide them, the size of their loans and

Portugal is also a member of Organization for Economic Cooperation and Development (OECD), the United Nations (UN) and its specialized agencies, the World Trade Organization (WTO) since 1995 and the World Tourism Organization (UN WTO) since 1976.

In several multilateral financial organizations of which it is a member, Portugal plays a dual role as a Member State donor and beneficiary. It is in the case of the World Bank that Portugal obtains its greatest return on investment,

16 International Bank for Reconstruction and Development (IBRD); International Development Agency (IDA); International Finance Corporation (IFC); Multilateral Investment Guarantee Agency (MIGA); International Centre for Settlement of Investment Disputes (ICSID). 17 International Finance Corporation (IFC – WB Group), Multilateral Investment Guarantee Agency (MIGA – WB Group), International Development Association (IDA – WB Group), Inter-American Development Bank (IDB), Fund for Special Operations (FSO – IDB Group), Multilateral Investment Fund (MIF – IDB Group), African Development Bank (AfDB), African Development Fund (AfDF – AfDB Group), European Bank for Reconstruction and Development (EBRD).

67

aicep Portugal Global Portugal - Country Profile (May 2009) but it is in the IDB that it sees the biggest ratio between

without having to comply with any formalities at the time

donation and return, in large measure because of its

when goods pass across an internal frontier. The absence of

reduced financial participation.

customs controls does not imply, however, the elimination of rules relating to transport, insurance, quality, and

At the regional level, Portugal has been a member of the

product technical specifications. Such rules exist, and in

European Union since 1 January 1986 and is part of the

general, are already imposed through existing harmonized

Council of Europe, the Western European Union (WEO)

community legislation with the purpose of protecting the

and the European Space Agency (ESA). Presently, the EU

health and safety of consumers.

includes 27 members, but only 1618, including Portugal, have adopted the common European currency, and thus

The circulation of merchandise within the European Union

are members of the euro area and comprise the European

must be accompanied by all documentation usually required

Economic and Monetary Union.

by the national authorities and these include: transport documents; commercial invoice; and certificates of compliance as to quality, sanitary and phytosanitary measures. The

14. Legal Requirements for Market Access

inspection can occur at any time and place, from the point that

Portugal’s trade relations, and those of the other Member

In addition, there are a complex of intra-community

States of the EU, unfold at two levels: those that take place

transactions20 (threshold values defined by INE) that require

within the EU and thus are intra-community exchanges,

companies to declare the respective value or amounts of

and those that occur with third countries and are ruled by

goods (Intrastat Declaration).

the goods were shipped up to the point of final consumption.

the EU’s Common Trade Policy.

14.1 Intra-EU exchange procedures Goods that originate within the European Union or are in free circulation19 in community territory (http://europa.eu/ scadplus/leg/en/s07000.htm), are exempt from customs control, without prejudice, however, from any taxation regarding quality and technical characteristics.

In this manner, community economic operators can buy and sell freely, at any point within community space, 18 E uro Area – Germany, Austria, Belgium, Cyprus, Slovakia (2009), Slovenia (2007), Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, Malta (2008), Netherlands and Portugal 19 G  oods in “free circulation” are those which have already complied with import formalities (including payment of customs duties and other taxes that may be due) in one Member State, so that they can circulate freely throughout European Community territory without needing to comply with any additional formalities. 20 Available at http://www.ine.pt

68

aicep Portugal Global Portugal - Country Profile (May 2009)

14.2 General import procedures

from a reduced rate of 5%. In the Autonomous Regions of Madeira and the Azores, the rates are slightly lower:

The Customs Union implies that besides the existence

the normal rate is 14%, the intermediate rate is 8% and

of a common customs union territory, the adoption

the reduced rate is 4%.

of common legislation – Community Customs Code (http://europa.eu/scadplus/leg/en/lvb/l11010.htm) – and

Finally, there exists a Free Trade Zone in Madeira, legally

the application of common custom duties to products

intended as a territorial enclave in which the existing

coming from third countries – the Common External

merchandise is, as a rule, considered foreign to the customs

Tariff (CET) . However, the Community grants customs

territory for the purpose of applying customs duties,

advantages to goods originating from developing

quantitative restrictions or measures with a similar intent.

21

countries (those that are beneficiaries of the System of Generalized Preferences – SGP, or to countries with which the EU has preferential agreements) which result in the application of more favourable customs duties (or even exemption) compared with those adopted by the WTO, with the exception of products deemed sensitive in terms of community interests.

If the importer intends to benefit from these procedures he is obliged to present proof regarding the origin of

Since they are duly authorized, all kinds of activities of an industrial, commercial or financial nature can take place in the duty-free zone, although the first two are confined to a circumscribed area (since physical movement of merchandise is involved), a situation that does not apply in so far as the so-called “offshore” services are concerned which can function at any location within the archipelago’s territory, including the city of Funchal.

the goods in question. In the case of imports originating from countries benefiting from the SGP procedures, he needs the “Certificate of Origin FORM A”, for imports from other countries, the “Trade Certificate of Circulation

The companies that operate in the Duty Free Zone of Madeira have access to a significant array of benefits of a customs, fiscal, financial, and economic nature.

EUR 1”. The aforementioned certificates can be obtained from the Directorate General of Customs and Special

More detailed information relating to the different aspects

Consumption Taxes (http://www.dgaiec.min-financas.pt/

of customs procedures in the community space, as well as

pt), the relevant agency that gives information relating

the necessary import documents can be found in Annex 1.

to the classification of products, from the duties that apply to merchandise imports regardless of origin, to

Merchandise originating from the community or from third

information relating to existing customs procedures.

countries and brought into any Member State, must coply with the technical demands established by community

Besides customs duties, imported products are subject to

legislation and must be accompanied by all required

payment of the value added tax (VAT) (http://www.dgci.

documentation demanded for its commercialization,

min-financas.pt/pt/apoio_contribuinte/guia_fiscal/iva/),

namely certificates relating to conformity, quality, sanitary,

which in Portugal is applied at a rate of 20%, although

veterinary, and phytosanitary regulations.

some products benefit from a 12% tax rate and others For the purposes of protecting consumer health and safety, 21 T he CET is based on the Harmonized System for Designation and Codification of Merchandise, with most import duties being “ad valorem”, calculated on the CIF value of merchandise.

the Community has attempted to harmonize (http://europa. eu/scadplus/leg/en/s16600.htm) rules relating to labelling, 69

aicep Portugal Global Portugal - Country Profile (May 2009) presentation and advertising of various products, such as

The foreign investor is granted the same treatment

food, toys, etc., to minimize obstacles to the free circulation

accorded to national investors, and since there exist no

of goods within community territory.

restrictions affecting the private sector, companies can be completely controlled by foreign capital.

In Portugal the Food and Economic Security Authority (ASAE – Autoridade de Segurança Alimentar e Económica)

As concerns the structure of the setting up a business,

(http://www.asae.pt/) is the national administrative

the choice depends on the investor’s objectives and also

authority specialized in securing food safety and for

on the degree of autonomy that the investor desires in

conducting inspections. In this manner, it is responsible for

relation to its headquarters in its home country. More

detecting and communicating any risks in the food chain as

detailed information on this matter, especially regarding the

well as exercising oversight of economic activity in the food

various judicial forms relating to companies, can be found

and non-food sector, through the inspection and protection

at the Business Formality Centres (Centros de Formalidade

of compliance with applicable regulatory legislation.

de Empresas –CFE) (http://www.cfe.iapmei.pt), where information is available and there are services to assist investors in facilitating the process of setting up, changing

14.3 Foreign investment procedures

or terminating a company and related actions.

The European Union Treaty establishes the free movement

In Portugal, in order to bring up to date the Portuguese

of capital, and provides for a general framework governing

legal framework to the very latest requirements of the

foreign investment applicable in community territory,

European Union and the OECD, a Single Contractual

defines the limits resulting from the principle of subsidiarity,

Procedures (Regime Contratual Único22 ) was adopted that

that is, without prejudice to the governing legislation of

is governed by Decree Law nº 203/2003 of 10 September

any Member State.

(free access at the web site address http://www.dre.pt/). This move revoked the requirement to register a company

Within the scope of the free movement of capital, all

a posteriori, or after setting up an investment in Portugal,

restrictions on capital movements – investments – are

and thus ending the differential treatment of foreign versus

prohibited, as are all restrictions on payments – whether it

national investors. A foreign promoter can also see his

be a payment for merchandise or for a service.

investment projects recognized as PIN projects – Projects of Potential National Interest (Projectos de Potencial Interesse

Member States can, however, take justified measures for the

Nacional) or PIN+ (Projectos de Potencial Interesse Nacional

purpose of preventing infractions to their own legislation,

classified as being of strategic importance), if the business

namely in fiscal matters and in the supervision of their

concerned is established through an intermediary of a

own financial institutions. The community countries can

branch established in Portugal and complies with the

also adopt procedures for declaring capital movements for

requirements foreseen by the following legislation:

administrative, informational or statistical purposes, and they can take other measures that may be justified by reasons of public order or public safety. However, all these measures

22 R  egime Contratual Único – applies to large scale investment projects, whether they are

and procedures must not constitute an arbitrary means to

of national origin or foreign origin, which represent a value exceeding 25 million euros

discriminate, nor be intended as simulated restrictions to the

the case of investments under this amount, that it be an initiative of a company whose

free movement of capital and payment flows.

that is to be invested all at once or phased in over a period of three years, or that in annual consolidadted turnover is over 75 million euros, or for an entity that is not a business enterprise but whose annual budget is over 40 million euros, independently from the sector of activity or the nationality of the investor.

70

aicep Portugal Global Portugal - Country Profile (May 2009) – PIN - D  ecree-Law nº 174/2008 of 26 August and Decision nº 30850/2008 of 28 November. – PIN+ - Decree-Law nº 285/2007 of 17 August.

Those who are interested can obtain further information by accessing the following links that can be found on the site of aicep Portugal Global: http://www.investinportugal.pt/ MCMSAPI_vPT/HomePage/Investir+em+Portugal/Vantagens/PIN/

http://www.investinportugal.pt/MCMSAPI_vPT/HomePage/ Investir+em+Portugal/Vantagens/PIN/Sistema+PINmais.htm

The entity aicep Portugal Global (http://www.investinportugal.pt/) is the relevant government agency offering guidance to accompany major investment projects (sole interlocutor) including assistance in reception, analysis, negotiation, and contract process; while small and medium-sized companies are handled by IAPMEI – Instituto de Apoio às Pequenas e Médias Empresas e à Inovação, or Institute for the Assistance of Small and Medium Sized Companies and for Innovation, which deals with investments under 25 million euros, except for those in the tourism sector.

Those who may be interested in the regulations relating to incentives offered by the Portuguese Government under the aegis of the new 2007-2013 National Strategic Reference Framework (Quadro de Referência Estratégico Nacional – QREN – 2007-2013), which covers economic, social and territorial development policies in Portugal made possible through the structural and cohesion funds of the European Union’s cohesion policy, may consult the web site http://www.qren.pt/.

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aicep Portugal Global Portugal - Country Profile (May 2009)

ANNEXES

from these operations and benefiting from total or partial exemption of import duties.

Annex 1 – Custom Procedures Transformation under Customs Control – implies the use The Community Customs Code harmonized and

in customs territory of merchandise originating from third

simplified administrative formalities affecting the

countries, there to undergo transformation that modifies its

movement of goods between Member States and third

nature or its condition without being subject to import duties

countries, enabling the adoption of different types of

or trade policy measures, and the respective introduction into

customs procedures:

free circulation of the resulting transformed products after the payment of respective charges. These products are considered

Free Circulation – introduction of a product originating

manufactured products.

in a third country into European Union territory conferring on it customs statute of community merchandise, after completing import formalities (including payment of customs duties and other taxes, if due), so that these goods can move freely within EU space.

Temporary Imports – temporary admission of noncommunity products destined for subsequent reexport, with suspension of customs duty payments and other charges, for a determined period of time, without undergoing any modification other than normal

Customs Warehousing – allows for warehousing, among others, of non community merchandise, without these goods being subject to import duties or to trade policy measures.

Inward Processing – presupposes the transformation of non-community merchandise and goods introduced under Free Circulation, allowing for the adoption of two systems:

depreciation resulting from the use to which the goods may have been subjected to. Portugal is a signatory to the Convention that established the ATA Carnet under which commercial samples, as well as professional materials and equipment destined for trade fairs and commercial exhibitions, shows, exhibits, and the like, are admitted. (http://www.acl.org.pt/CmsPage.aspx?PageIndex=52).

Suspension System – use of non-community merchandise destined for subsequent re-export under the form of compensating products (final product resulting from finishing operations performed), without the imposition of customs duties.

Drawback System – transformation of goods introduced under free circulation, with re-imbursement or exemption of import duty payments or other taxes, in cases where the goods are exported under the form of compensatory products.

Outward Processing – allows for the temporary export of community merchandise in order to permit subsequent working on this merchandise in a third country and to introduce under free circulation the products resulting 72

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Annex 2 – Import Procedures

Pro-Forma Invoice – this invoice can be solicited by the importer for merchandise that is subject to licensing or as a

Documents fulfil a fundamental role in whatever commercial transaction, but they are substantially different depending on whether one is dealing with the import/ export of merchandise (trade with non-European Union countries), or with the purchase/sale of goods (trade between Member States of the European Union).

business proposal, or even for temporary imports of goods. When it is required it is usually presented in duplicate.

Bill of Lading – the elements contained in this document must be in agreement with those appearing on the Commercial Invoice.

Packaging List – although not obligatory, it eases the In the case of non-EU exchanges of goods what is important are the licenses (where products are subject to

customs disembarkation of merchandise when goods originate in third countries.

restrictions), the declarations (for merchandise subject to statistical vigilance) and to certificates (always if required

Certificate of Origin – its presentation is required in the

by law, as is the case with a large part of agricultural

case of imports of merchandise subject to preferential

products), or a single administrative document, the

guidelines, originating from countries with which the EU has

commercial invoice and the certificate of origin.

preferential agreements (EUR 1) or from countries benefiting from the System of Generalized Preferences (FORM A). The

Concerning the documentation needed to accompany the

importer also can solicit this certificate for reasons that have

intra-community purchases or sales of goods, one needs

nothing to do with the application of customs preferences

the commercial invoice, the certificate of order depending on

when certification is demanded by a Chamber of Commerce

the type of goods, and the Intrastat Declaration.

of the country of the origin of the goods.

Import operations (similar to those regarding export operations) must be completed with the assistance of a Forwarding Agent familiar with the documentation involved.

Some examples:

Trade Invoice – it is obligatory to present an original and at least one copy of a carefully compiled invoice that is used as the basis for applying whatever fiscal duties are required. This document should include, among others, the following entries: name and address of the exporter/

Single Administrative Document – a document used throughout the entire community territory to fulfil customs formalities of both imports and exports.

Other Documents – in cases where national, community or specific regulations exist for the protection of health and public safety, the defence of consumers and the environment, certain imports into the Community of an ever increasing number of goods are subject to the presentation of various certification, according to the products in question as, for example, health, phytosanitary, quality, and conformity certificates, among others.

expediter and of the importer/purchaser, place and date of issue, invoice number and shipping order, country of origin, point of embarkation and destination, means of transportation being used, conditions of sale and means of payment, description of the merchandise, the unit price, and total price. 73

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Annex 3 - Useful Internet sites INE – Instituto Nacional de Estatística www.ine.pt (National Statistics Institute) GEE – Gabinete de Estratégia e Estudos www.gee.min-economia.pt (Ministry of Finance, Research Department) GPEARI – Gabinete de Planeamento, Estratégia, Avaliação e Relações Internacionais www.gpeari.min-financas.pt/ (Department of Planning, Strategy, Valuation and External Relations) Diário da República www.dre.pt (Official Journal of the Government) Portal do Governo Português www.portugal.gov.pt (Portuguese Government Portal) Ministério da Economia e da Inovação www.min-economia.pt (Ministry of Economics and Innovation) Ministério das Finanças e da Administração Pública www.min-financas.pt (Ministry of Finance and Public Administration) Direcção Geral de Estudos e Previsão www.dgep.pt (General Directorate for Research and Forecasting) CFE-IAPMEI – Centro de Formalidade de Empresas www.cfe.iapmei.pt (Formalities Centre for Business) Direcção Geral das Alfândegas www.dgaiec.min-financas.pt (Customs Office) Câmara Portuguesa dos Despachantes Oficiais www.cdo.pt (Portuguese Chamber of Official Shipping Agents) Associação dos Transitários de Portugal www.apat.pt (Portuguese Forwarders Association) ASAE – Autoridade de Segurança Alimentar e Económica www.asae.pt (Food and Economic Security Authority) IPQ - Instituto Português da Qualidade www.ipq.pt (Portuguese Institute for Quality) CERTIF – Associação para a Certificação de Produtos www.certif.pt (Association for Product Certification) Portal do Cidadão www.portaldocidadao.pt (The Citizen’s Portal) Associação Nacional de Municípios www.anmp.pt (National Association of Cities and Towns) AEP – Associação Empresarial de Portugal www.aeportugal.pt (Portuguese Businessmen’s Association) AIP – Associação Industrial Portuguesa www.aip.pt (Portuguese Industrial Association) APB – Associação Portuguesa de Bancos www.apb.pt (Portuguese Banking Association) APDC – Associação Portuguesa para o desenvolvimento das Comunicações www.apdc.pt (Portuguese Association for Communications Development) ANACOM – Autoridade Nacional de Comunicações www.anacom.pt (National Communications Authority) Turismo de Portugal, IP www.turismodeportugal.pt (The National Tourism Authority) Portal Oficial do Turismo www.visitportugal.com (Official Tourism Portal) 74